FY2014 Preliminary Results

Transcription

16 February 2015
Results for the 12 months ended 31 December 2014 (Unaudited)
Based on IFRS and expressed in US Dollars (US$)
Acacia Mining plc (“Acacia’’) reports full year 2014 results
“2014 was a watershed year for Acacia as we returned to free cash generation for the first time since 2011, exceeding our
initial production guidance and reducing all-in sustaining costs (AISC) year-on-year by 18%. Coupled with this we completed
our rebranding to reflect our new approach to running the business, set out our five year plan for the Company and expanded
our footprint into West Africa,” said Brad Gordon, Chief Executive Officer of Acacia Mining. “We have continued to deliver
operationally and demonstrated consistent cost control which has meant that we have now exceeded the planned savings set
out by the Operational Review 18 months ago. For 2015 we expect a further increase in production to 750,000 to 800,000
ounces of gold, predominantly in the second half, at reduced AISC of US$1,050 to US$1,100 per ounce sold driven by further
operational improvements and the planned ramp up at Bulyanhulu.”
Full Year Financial Highlights
 Revenue of US$930 million in line with 2013, as increased ounces sold offset the lower gold price
1,3
 EBITDA of US$253 million, 5% higher than 2013, impacted by non-cash charges of US$27 million
3
 Net earnings of US$90 million (US22.1 cents per share)
 Operational cash flow increased to US$290 million, a 55% increase on 2013
 Cash position increased by US$11 million to stand at US$294 million as at 31 December 2014
 Capital expenditure of US$254 million, 34% lower than 2013 due to revised mine plans and stringent capital controls
 Proposed final dividend of US2.8 cents per share, total dividend for 2014 of US4.2 cents per share, up 40% on 2013
Full Year Operational Highlights

Gold production of 718,651 ounces, 13% higher than 2013, with gold sales of 703,680 ounces
1,2

AISC of US$1,105 per ounce sold, 18% lower than 2013
1,2

Cash costs of US$732 per ounce sold, 10% lower than 2013

Operational Review cost reductions of US$185 million delivered as planned

Bulyanhulu CIL Expansion project fully commissioned in the fourth quarter

Gokona Underground project approved by the Board and moving ahead into execution phase

2.3Moz of resources added at Bulyanhulu as a result of drilling programmes

Greenfield exploration progressed well with continued positive results in West Kenya and entry into Burkina Faso
Three months ended 31 December
2
2014
2013
181,084
165,375
194,243
168,167
744
774
(Unaudited)
Gold production (ounces)
Gold sold (ounces)
1
Cash cost (US$/ounce)
1
AISC (US$/ounce)
1
Average realised gold price (US$/ounce)
(in US$'000)
Revenue
1,3
EBITDA
3
Net earnings/(loss)
3
Basic earnings/(loss) per share (EPS) (cents)
3
Cash generated from operating activities
3,4
Capital expenditure
Year ended 31 December
2
2014
2013
718,651
637,002
703,680
643,597
732
812
1,088
1,194
1,163
1,251
1,105
1,258
1,346
1,379
243,861
221,603
930,248
929,004
45,260
21,136
44,866
(97,700)
252,716
90,402
240,407
(781,101)
5.2
60,993
57,807
(23.8)
48,193
91,190
22.1
289,528
253,802
(190.4)
187,115
385,068
1
These are non-IFRS measures. Refer to page 25 for definitions
2013 comparative amounts have been restated to exclude Tulawaka
3
EBITDA, net earnings, earnings per share, cash generated from operating activities and capital expenditure include continuing and discontinued operations
4
Excludes non-cash capital adjustments (reclamation asset adjustments) and includes finance lease purchases
2
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www.acaciamining.com
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CEO Statement
I am delighted with the progress we have made across the business over the last twelve months. We continued to deliver
operationally, with each quarter showing lower all-in sustaining costs. This discipline enabled us to return to free cash
generation, for the first time since 2011, which was one of our key objectives for the year. Our continued operational
improvement was driven by a fresh approach to running the Company focused on three key pillars: Our Business, Our People
and Our Relationships. In order to further embed and reflect this approach, our shareholders voted to change the Company’s
name to Acacia Mining plc from African Barrick Gold plc on 26 November. Our ambition is that, through the adoption of this
new name, all of our people and external stakeholders become aligned with our new approach and goal of becoming a leading
African mining company. We have already seen evidence that this is happening as the new approach is put into action.
During 2014 we continued to enhance our mines and approved the development of an underground operation at North Mara
which will significantly improve both the economics of the mine and the social situation in the area. We are continuing to turn
Bulyanhulu into a world class mine and during the year engaged contractors to accelerate underground development to provide
future flexibility as well as pouring the first gold from the CIL Plant Expansion at the mine. With a contrarian approach we took
advantage of the dislocation in the market to expand our exploration footprint, and in November expanded into West Africa
through an exciting and highly prospective exploration project in Burkina Faso.
Year in Review
2014 was a successful year for Acacia, with production increasing again to 718,651 ounces, 13% higher than 2013 and 4%
above the upper end of our initial guidance range for the year. Production increased at all three mines with Bulyanhulu up 18%
on 2013, Buzwagi up 15% on 2013 and delivering its highest ever year of gold production and North Mara remaining the
standout performer, producing 273,803 ounces as the grade from the Gokona pit continued to be strong.
On the cost side, we demonstrated consistent cost control and have now taken US$600 per ounce out of our quarterly all-in
sustaining costs (“AISC”) since Q3 2012. This translated into full year AISC of US$1,105 per ounce sold, down 18% on 2013
and at the bottom of our guidance range. We delivered on our targeted cost savings of US$185 million set out in the
Operational Review in 2013 and our continued focus is on removing further costs from the mining cycle. As a result of the cost
savings, cash costs per ounce continued to come down and for 2014 we delivered cash cost per ounce sold of US$732, below
our guidance range and 10% lower than 2013.
We returned to cash generation for the first time in three years during 2014, adding US$11 million to the balance sheet. Whilst
this is positive, it does not reflect the scale of change that took place during the year, with positive cash flows of more than
US$100 million before growth capital, dividends and Tulawaka sale costs. It should be noted that the average realised gold
price of US$1,258 per ounce was over US$100 per ounce lower than 2013 and over US$400 per ounce lower than 2012, years
in which we did not generate positive free cash flow.
Total revenue for the year amounted to US$930.2 million which was in line with 2013 despite the lower average realised gold
price as sale ounces for 2014 exceeded prior year sales by 9%. EBITDA increased by 5% to US$252.7 million in 2014 mainly
due to a US$26.1 million reduction in gross direct mining costs, reflected in the 10% reduction of cash costs to US$732 per
ounce sold. Earnings for the year were US$90 million, or US 22.1 cents per share. These were impacted by significant
revaluations of our indirect tax balance held in Tanzanian shillings and out of the money oil hedges partially offset by deferred
taxation changes at Buzwagi.
Our Approach
Our new approach to operating our assets has focused on three key pillars: Our Business, Our People and Our Relationships.
We have made significant technical changes to Our Business, to ensure that each of our mines are correctly engineered and
set up to deliver free cash flow:
‒
At Bulyanhulu, we have changed to a mechanised mining method, with long hole stoping becoming the prime mining
method replacing labour intensive conventional hand-held mining. This is both safer and more cost effective than
previous hand-held methods. We have also brought in contractors to accelerate development of the Upper East and
Lower West Zones in the mine which will improve our mining flexibility and allow us to mine at our reserve grade.
During the year we also commissioned the CIL Plant Expansion at the mine which will provide incremental low cost
ounces from the reprocessing of tailings.
‒
At North Mara, we are moving forward with the creation of an underground operation at one of the mine’s open pits,
having had the project approved by the Board in Q4 2014. The Gokona Underground project is expected to produce
450,000 ounces of gold over a 5 year life of mine, with an AISC of less than US$750 per ounce sold. We believe that
this will be more profitable than open pit mining and will have a much lower impact on the surrounding communities.
‒
At Buzwagi, we shortened the life of the mine so that we are mining only profitable ounces. Our mine plan now
produces positive cash flow over each year of its remaining life.
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Our second pillar is Our People, who are our core asset. We have significantly reduced the levels of management,
restructured our corporate offices, commenced a new cultural transformation programme (Tufanikiwe Pamoja / Together We
Succeed) and introduced a behavioural safety programme (Tunajali / We Care). We are focused on creating a high
performance culture where our people are held accountable, but are given the tools to succeed. As part of this process we
have already uncovered real talent within the workforce as well as seeing talented people returning to Acacia.
The final pillar is Our Relationships, which we have been focused on improving with the communities around our mines and
with the Government. We have engaged more actively in the community, the media and our broader stakeholders. We have
also worked hard to build our relationships with local and national Government officials to ensure that we receive the
appropriate support for our business to continue to be a key economic development driver for our host countries.
Expanding our Footprint
We continue to look to enhance our portfolio of assets, and during 2014 made our first entry into West Africa by entering into
an earn-in agreement over the South Houndé Project in Burkina Faso. We believe that exploration is a significant driver of
value for the business over the long term and now is the time to invest, which is a contrarian view to many in the market. The
earn-in allows us to earn an interest of up to 75% over a four year period in the highly prospective project which already
includes a 1.5Moz Au Inferred resource.
We also had a successful year within our existing exploration portfolio, with the drilling programmes at Bulyanhulu leading to
the addition of 2.3Moz of gold into resources at very competitive costs. This is approximately half of our three year target to add
5Moz of gold resources at the mine as we look to ensure that production matches the geological endowment at Bulyanhulu.
We also made good progress in Kenya with an extensive and successful aircore drilling programme across the land package
which is now being followed up with deeper drilling.
We will continue to look for further exploration acreage in West Africa as well as other opportunities to drive shareholder value.
Safety
It is with sadness that I report that we experienced a fatality during the year, with Emmanuel Mrutu, an underground miner at
Bulyanhulu, passing away after having been fatally injured in a fall of ground incident at the mine in March. We fully
investigated the incident and have implemented a number of recommendations to prevent re-occurrence. Safety is something I
am passionate about and having been involved in underground mining for over 20 years, I am well aware of the risks. One of
the key projects we started during the year was “Tunajali” or “We Care”, a behavioural safety programme designed to embed
the culture of safety, rather than just relying on checks and processes. This programme has now been rolled out across all of
our operations and we are beginning to see the benefits in our on-going safety statistics. We continue to target zero injuries
and having every person going home safely every day.
Indirect Taxes
Further progress has been made with respect to the build-up of VAT, and the Company received net refunds of US$2.6 million
during the fourth quarter, bringing total net refunds for 2014 to approximately US$41 million. Total gross refunds received in
2014 amounted to US$132.8 million. We have also continued discussions with the Tanzanian Government on the
establishment of an appropriate mechanism to safeguard the recoverability of VAT payments over the long term. These are
centred around the establishment of an escrow account for VAT paid on domestic goods, similar to that currently used to
provide for the refunding of VAT paid on imports and our discussions are on-going. As at 31 December 2014, the outstanding
amount relating to the total indirect tax receivable, not covered by the 2011 Memorandum of Settlement, stood at US$46
million, roughly US$49 million lower than 31 December 2013.
Barrick Gold shareholding
In March 2014, our majority shareholder Barrick Gold sold 10% of Acacia’s outstanding share capital to institutional
shareholders. The placing was priced at 275 pence and reduced Barrick’s shareholding to 63.9%. This was a positive step by
Barrick and increased our free float by around 40% which led to a subsequent increase in trading liquidity.
Final dividend
The Board of Directors is pleased to announce the approval of a final dividend for 2014 of US2.8 cents per share, an increase
of 40% when compared to 2013. Subject to shareholders approving this recommendation at the AGM on 23 April 2015, the
final dividend will be paid on 29 May 2015 to shareholders on the register as of 8 May 2015. The ex-dividend date is 7 May
2015. Together with our interim dividend of US1.4 cents per share, this represents a payout level of 19% of cash flow as
defined by our dividend policy.
Outlook
The focus for 2015 is to continue to deliver free cash flow from our high quality portfolio of mines as we work to enable them to
deliver to their full geological potential. We have implemented changes across our business in order to continue to drive cost
reductions and production growth. We are focused on continued delivery operationally in order to drive free cash flow, of which
15-30% is expected to be returned to shareholders via dividends, with the remainder appropriately allocated across further
capital returns, organic growth or acquisition opportunities.
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We successfully overcame challenges to the business in 2014 and expect that 2015 will present similar challenges as we seek
to successfully deliver on the turnaround at Bulyanhulu, move into commercial ore production from the Gokona Underground at
North Mara and ensure that we maintain our strengthened relationships with all stakeholders and the Government.
For 2015 we expect to see increased production of between 750,000 to 800,000 ounces of gold. Production at each of the
mines is expected to remain in line with Q4 2014 during the first quarter, with the bulk of the increase in production expected to
be realised in the second half of the year.
At the mine level, we expect a significant ramp up at Bulyanhulu as we move through the year driven by an improvement in
head grade, incremental production from the Upper East Zone and an increased contribution from the expanded CIL circuit. At
Buzwagi, production is expected to be broadly in line with 2014 as we continue to operate around the reserve grade of the
asset. At North Mara, head grade is expected to decline marginally as the Gokona pit transitions from an open pit to
underground operation, leading to an increased proportion of ore being sourced from the lower grade Nyabirama pit during the
year. This will be partially offset by the higher grade ore from underground. As a result we expect to see a corresponding
reduction in production at the mine.
We are targeting further reductions to our unit costs in 2015, predominantly driven by the incremental production at Bulyanhulu,
and estimate the cash cost per ounce for the year, including royalties, will be between US$695-725 per ounce sold, a reduction
of up to 5% on 2014.
For 2015 we expect overall capital expenditure of between U$220 million – US$240 million, a further reduction on 2014 as we
enforce stringent capital controls and move closer to industry average per ounce spend. We expect sustaining capital of US$90
million – US$100 million as we scale up operations at Bulyanhulu and set up the long term future at North Mara; with capitalised
development, inclusive of deferred stripping of US$125 million – US$135 million. This is driven by increased development
activity at Bulyanhulu which commenced in 2014 focused on opening additional mining areas, and at North Mara as work
accelerates on the Gokona Underground project. The increase in spend is partially offset by a reduction in capital requirements
at Buzwagi as it moves towards the end of mining activity. Expansionary capital of US$5 million relates to additional
underground drilling at Bulyanhulu aimed at increasing the scale of the ore body as well as expansionary drilling at North Ma ra,
predominantly under the Nyabirama pit.
As a result of the above, coupled with flat corporate administration costs, we estimate all-in sustaining cost per ounce sold for
the year will be between US$1,050 – US$1,100, a reduction of up to 5% on 2014. The evolution of these costs during the year
will be driven by our production profile and as a result we expect to see lower costs in the second half than the first.
Finally, I would like to thank all of my colleagues for their commitment, enthusiasm and hard work throughout what has been a
transformative year for Acacia. I am delighted by our progress to date, and am driven by the opportunity to make this company
a leader in Africa. I would also like to thank our Board for their support and guidance through the year and I am very much
looking forward to 2015 and beyond.
Brad Gordon
Chief Executive Officer
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Key statistics – restated to reflect Tulawaka as a discontinued operation
(Unaudited)
Tonnes mined (thousands of tonnes)
Ore tonnes mined (thousands of tonnes)
Ore tonnes processed (thousands of tonnes)
Process recovery rate (percent)*
Head grade (grams per tonne)*
Gold production (ounces)
Gold sold (ounces)
Copper production (thousands of pounds)
Copper sold (thousands of pounds)
1,4
Cash cost per tonne milled (US$/t)
Per ounce data
3
2014
2013
10,776
11,570
2,281
2,151
2,405
1,817
85.5%
88.5%
2.7
3.2
181,084
165,375
194,243
168,167
3,107
3,548
3,815
3,010
60
72
2
Average spot gold price
1
Average realised gold price
1
Total cash cost
1
All-in sustaining cost
Average realised copper price (US$/lb)
3
2014
2013
41,684
54,076
8,170
7,225
8,413
7,914
88.0%
88.4%
3.0
2.8
718,651
637,002
703,680
643,597
14,068
11,970
13,448
11,570
61
66
1,201
1,194
1,276
1,251
1,266
1,258
1,411
1,379
744
1,088
2.80
774
1,163
3.31
732
1,105
3.01
812
1,346
3.24
Financial results – restated to reflect Tulawaka as a discontinued operation
(Unaudited, in US$'000 unless otherwise stated)
Revenue
Cost of sales
Gross profit
Corporate administration
Share based payments
Exploration and evaluation costs
Corporate social responsibility expenses
Impairment charges
Other charges
Profit/(loss) before net finance expense and taxation
Finance income
Finance expense
Profit/(loss) before taxation
Tax credit/(expense)
Net profit/(loss) from continuing operations
Discontinued operations:
Net (loss)/gain from discontinued operations
Net profit/(loss) for the year
Attributed to:
Owners of the parent (net earnings/(loss))
- Continuing operations
- Discontinued operations
Non-controlling interests
2014
243,861
(191,732)
52,129
(10,274)
(2,416)
(4,331)
(3,412)
(21,509)
10,187
385
(3,182)
7,390
13,906
21,296
3
2013
221,603
(169,770)
51,833
(8,273)
(625)
(5,979)
(3,667)
(133,320)
(8,995)
(109,026)
598
(2,462)
(110,890)
19,232
(91,658)
2014
930,248
(688,278)
241,970
(32,685)
(8,388)
(18,284)
(10,787)
(47,921)
123,905
1,324
(10,043)
115,186
(25,977)
89,209
2013
929,004
(713,806)
215,198
(33,970)
1,813
(16,927)
(12,237)
(1,044,310)
(30,424)
(920,857)
1,670
(9,552)
(928,739)
187,959
(740,780)
3
(160)
21,136
(8,684)
(100,342)
726
89,935
(57,653)
(798,433)
21,136
21,296
(160)
-
(97,700)
(91,658)
(6,042)
(2,642)
(2,642)
90,402
89,209
1,193
(467)
(467)
(781,101)
(740,780)
(40,321)
(17,332)
(17,332)
1
These are non-IFRS financial performance measures with no standard meaning under IFRS. Refer to”Non IFRS measures”’ on page 25 for definitions.
Reflect the London PM fix price.
Restated for the reclassification of Tulawaka as a discontinued operation.
4
Cash cost per tonne milled excluding the reprocessing of tailings at Bulyanhulu amounted to US$69 per tonne for the quarter and US$65 for the year ended 31
December 2014.
*Reported process recovery rates and head grade include tailings retreatment at Bulyanhulu. Excluding the impact of the tailings retreatment Q4 and FY14 process
recovery would be 87.4% and 88.9% respectively, with Q4 and FY14 head grade being 3.1g/t and 3.2g/t respectively
2
3
LSE:ACA
5
For further information, please visit our website: www.acaciamining.com or contact:
Acacia Mining plc
+44 (0) 207 129 7150
Brad Gordon, Chief Executive Officer
Andrew Wray, Chief Financial Officer
Giles Blackham, Investor Relations Manager
Bell Pottinger
Daniel Thöle
+44 (0) 203 772 2500
About Acacia Mining plc
Acacia Mining plc (LSE:ACA), formerly African Barrick Gold, is Tanzania’s largest gold miner and one of the largest producers
of gold in Africa. We have three producing mines, all located in Northwest Tanzania: Bulyanhulu, Buzwagi, and North Mara and
a portfolio of exploration projects in Tanzania, Kenya and Burkina Faso.
Our approach is focused on strengthening our three core pillars; our business, our people and our relationships. Our name
change from African Barrick Gold to Acacia Mining reflects a new approach to mining, and an ambition to create a leading
African Company.
Acacia Mining is a UK public company headquartered in London. We are listed on the Main Market of the London Stock
Exchange with a secondary listing on the Dar es Salaam Stock Exchange. Barrick Gold Corporation remains our majority
shareholder. Acacia Mining reports in US dollars and in accordance with IFRS as adopted by the European Union, unless
otherwise stated in this announcement.
Conference call
A presentation will be held for analysts and investors on 16 February 2015 at Noon London time.
For those unable to attend, an audio webcast of the presentation will be available on our website www.acaciamining.com. For
those who wish to ask questions, the access details for the conference call are as follows:
Participant dial in:
+44 (0) 203 003 2666 / +1 866 966 5335
Password:
Acacia
FORWARD- LOOKING STATEMENTS
This report includes “forward-looking statements” that express or imply expectations of future events or results. Forward-looking statements are
statements that are not historical facts. These statements include, without limitation, financial projections and estimates and their underlying
assumptions, statements regarding plans, objectives and expectations with respect to future production, operations, costs, projects, and
statements regarding future performance. Forward-looking statements are generally identified by the words “plans,” “expects,” “anticipates,”
“believes,” “intends,” “estimates” and other similar expressions.
All forward-looking statements involve a number of risks, uncertainties and other factors, many of which are beyond the control of Acacia,
which could cause actual results and developments to differ materially from those expressed in, or implied by, the forward-looking statements
contained in this report. Factors that could cause or contribute to differences between the actual results, performance and achievements of
Acacia include, but are not limited to, changes or developments in political, economic or business conditions or national or local legislation or
regulation in countries in which Acacia conducts - or may in the future conduct - business, industry trends, competition, fluctuations in the spot
and forward price of gold or certain other commodity prices (such as copper and diesel), currency fluctuations (including the US dollar, South
African rand, Kenyan shilling and Tanzanian shilling exchange rates), Acacia’s ability to successfully integrate acquisitions, Acacia’s ability to
recover its reserves or develop new reserves, including its ability to convert its resources into reserves and its mineral potential into resources
or reserves, and to process its mineral reserves successfully and in a timely manner, Acacia‘s ability to complete land acquisitions required to
support its mining activities, operational or technical difficulties which may occur in the context of mining activities, delays and technical
challenges associated with the completion of projects, risk of trespass, theft and vandalism, changes in Acacia‘s business strategy including,
the ongoing implementation of operational reviews, as well as risks and hazards associated with the business of mineral exploration,
development, mining and production and risks and factors affecting the gold mining industry in general. Although Acacia‘s management
believes that the expectations reflected in such forward-looking statements are reasonable, Acacia cannot give assurances that such
statements will prove to be correct. Accordingly, investors should not place reliance on forward-looking statements contained in this report.
Any forward-looking statements in this report only reflect information available at the time of preparation. Subject to the requirements of the
Disclosure and Transparency Rules and the Listing Rules or applicable law, Acacia explicitly disclaims any obligation or undertaking publicly to
update or revise any forward-looking statements in this report, whether as a result of new information, future events or otherwise. Nothing in
this report should be construed as a profit forecast or estimate and no statement made should be interpreted to mean that Acacia‘s profits or
earnings per share for any future period will necessarily match or exceed the historical published profits or earnings per share of Acacia.
LSE:ACA
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LSE: ACA
TABLE OF CONTENTS
2014 Operating Review
8
Exploration Review
12
Financial Review
15
Going Concern Statement
24
Non-IFRS measures
25
Risk Review
27
Condensed Financial Information:
- Consolidated Income Statement and Consolidated Statement of Comprehensive Income
29/30
- Consolidated Balance Sheet
31
- Consolidated Statement of Changes in Equity
32
- Consolidated Statement of Cash Flows
33
- Notes to the Condensed Financial Information
34
LSE:ACA
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2014 Operating Review
We made good progress across our assets in 2014 delivering production for the year of 718,651 ounces, an increase of 13%
year on year, together with a 10% decrease in cash costs and an 18% decrease in AISC. Increased production drove a 9%
increase in sales volumes to 703,680 ounces.
Operationally, North Mara’s production of 273,803 ounces was 7% higher than the prior year due to improved throughput
rates. AISC fell by 23% to US$947 per ounce sold predominantly due to lower capitalised development and sustaining capital
expenditure together with the impact of increased sales volumes. During Q4 2014, our Board approved the Gokona
Underground project which is expected to produce 450,000 ounces of gold over a 5 year life of mine, with an AISC of below
US$750 per ounce sold. This project is now moving into the execution phase and is expected to deliver first stoping ore in the
first half of 2015.
Bulyanhulu saw an 18% increase in production to 234,786 ounces due to an improved run of mine grade (8.7g/t) as a result of
access to higher grade stopes, coupled with higher throughput from the processing of reclaimed tailings which delivered
12,405 ounces of production. This was partially offset by lower recoveries as a result of underperformance of the elution circuit
which led to increased tailings losses. AISC was down by 6% to US$1,266 per ounce sold as cost savings were partially offset
by an investment in underground development to drive the grade improvement.
At Buzwagi, gold production for the year of 210,063 ounces was 15% higher than 2013, due to improved head grade as a
result of mining in the main ore zone and increased recoveries due to business improvement projects. This was partially offset
by a 7% decrease in throughput due to plant downtime for planned and unplanned maintenance. Changes to the mine plan in
2013 reduced waste tonnes mined, delivering a 24% reduction in total tonnes mined against the prior year. The combination of
these factors resulted in a reduction in AISC of 30% to US$1,055 per ounce sold.
Total tonnes mined during the year amounted to 41.7 million tonnes, a decrease of 23% on 2013 as a result of the changes to
mine plans at both North Mara and Buzwagi. Ore tonnes mined were 8.2 million tonnes compared to 7.2 million in 2013, also as
a result of the changes to the mine plans in 2013.
Ore tonnes processed amounted to 8.4 million tonnes, an increase of 6% on 2013 primarily driven by increased throughput at
Bulyanhulu and North Mara partially offset by reduced throughput at Buzwagi.
Head grade for the year of 3.0 g/t was 7% higher than in 2013 (2.8 g/t). This was due to a 13% increase in head grade at
Buzwagi and a 12% increase in run of mine grade at Bulyanhulu, partially offset by the reprocessing of lower grade tailings at
Bulyanhulu.
Our cash costs for the year were 10% lower than in 2013, and amounted to US$732 per ounce sold. The decrease was
primarily due to:
‒ The impact of the increased production base (US$112/oz);
‒ Reduction in the workforce (mainly a 28% decrease in the international workforce compared to the same period in
2013) (US$29/oz); and
‒ Lower G&A costs driven by lower warehouse related costs and lower management fee charges given the overall lower
corporate cost structure (US$22/oz).
Partly offset by:
‒ Lower capitalised development costs at Buzwagi and North Mara as a result of the revised mine plans driving a lower
strip ratio (US$72/oz); and
‒ Higher maintenance costs at Bulyanhulu and Buzwagi due to increased maintenance activity as a result of
maintenance scheduling and the impact of maintenance cycles (US$19/oz).
The all-in sustaining cost of US$1,105 per ounce sold for the year was 18% lower than 2013, predominantly due to lower cash
costs as described above and the impact of higher sales volumes on per unit costs, combined with an increased production
base mainly driven by the improved head grade, lower sustaining capital expenditure at all sites and lower capitalised
development costs at North Mara and Buzwagi due to the revised mine plans.
As a result of operational and working capital improvements, cash generated from operating activities in 2014 increased by 55%
over the prior year period to US$289.5 million despite the reduction in the average realised sales price.
Capital expenditure for the year ended 31 December 2014 amounted to US$253.8 million compared to US$385.1 million in
2013. Capital expenditure primarily comprised capitalised development expenditure (US$132.4 million), including US$21.2
million related to development costs for the Bulyanhulu Upper East and Lower West projects, investment in the Bulyanhulu CIL
Expansion project (US$44.5 million), component and equipment costs (US$21.8 million) and investments in tailings and
infrastructure (US$32.4 million).
As previously announced, as of 1 January 2015 we have changed our definition of gold produced. Going forward, we will
record only gold poured as production ounces and will not include changes to our gold-in-circuit (“GIC”) ounces. Whilst we
expect GIC to remain relatively stable going forward, we will now eliminate any potential volatility from movement in GIC levels
and would expect our production ounces to more closely match our sales ounces. This new definition is included in our
expected production levels for 2015.
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8
Mine Site Review
Bulyanhulu
Key statistics
(Unaudited)
Key operational information:
Ounces produced
Ounces sold
1
Cash cost per ounce sold
1
AISC per ounce sold
Copper production
Copper sold
Underground ore tonnes hoisted
Run-of-mine processing:
Ore milled
Head grade
Mill recovery
Ounces produced
1
Cash cost per tonne milled
Reprocessed tailings:
Ore milled
Head grade
Mill recovery
Ounces produced
Capital Expenditure
- Sustaining capital
- Capitalised development
- Expansionary capital
- Non-cash reclamation asset adjustments
Total capital expenditure
2014
2013
2014
2013
oz
oz
US$/oz
US$/oz
Klbs
Klbs
Kt
66,033
63,166
772
1,225
1,370
1,425
245
53,186
56,735
776
1,118
1,348
1,304
222
234,786
215,740
812
1,266
5,289
4,925
909
198,286
195,304
890
1,344
4,855
4,508
872
Kt
g/t
%
oz
US$/t
245
9.0
83.8%
58,998
199
229
7.9
91.2%
53,186
193
906
8.7
88.0%
222,381
193
871
7.8
90.9%
198,286
200
Kt
g/t
%
oz
390
1.0
59.4%
7,035
-
617
1.1
56.9%
12,405
-
US$('000)
US$('000)
US$('000)
9,936
14,210
6,272
30,418
(181)
30,237
4,333
10,750
41,581
56,664
(5)
56,659
23,388
60,151
48,010
131,549
6,141
137,690
25,193
45,428
114,912
185,533
(10,044)
175,489
US$('000)
US$('000)
1
Operating performance
Full year gold production of 234,786 ounces was 18% higher than the prior year due to improved run of mine grade. This was
driven by increased access to higher grade stopes coupled with higher throughput as a result of the processing of tailings. This
was partially offset by lower recoveries as a result of underperformance of the elution circuit which led to increased tailings
losses. Gold ounces sold of 215,740 ounces were 10% higher than 2013 primarily due to the higher production base, but were
lower than production for the year due to strong production late in Q4 impacting on the timing of sales and a build-up in gold in
circuit as the new CIL circuit was commissioned.
Copper production of 5.3 million pounds for the year was 9% higher than in 2013 due to higher copper grades combined with
higher run of mine throughput.
Cash costs for the year of US$812 per ounce sold were 9% lower than the prior year of US$890, driven by the higher production
base, combined with savings in labour costs mainly due to a reduction in the international workforce, lower general
administration costs primarily resulting from lower management fees and increased capitalised development costs driven by
development acceleration projects. This was partially offset by higher contractor costs incurred for ore development and higher
energy costs mainly as a result of the increased processing activity with the new CIL circuit now fully commissioned.
AISC per ounce sold for the year of US$1,266 was 6% lower than in 2013 (US$1,344), as lower cash costs and sustaining
capital expenditure were partially offset by the investment in capitalised development.
The new CIL circuit was commissioned during the second half of 2014 with the first gold pour taking place in August 2014.
Production for the year from reprocessed tailings amounted to 12,405 ounces, lower than planned as a result of delays in
construction completion, issues experienced in the elution circuit performance and the detoxification of the tailings. The project
to accelerate the retreatment of the historic higher grade tailings in preference to the rougher tailings was completed and
commissioning trials have commenced.
In 2014 a key focus was on the accelerated development of the Upper East and Lower West zones to provide increased mining
flexibility and to ensure the mine is able to deliver to its geological potential. In order to achieve this, a specialist development
LSE:ACA
9
contractor was engaged in April. During the year total development costs incurred for the two initiatives (expensed and
capitalised) were US$21.2 million, and this is included in the Bulyanhulu and Group AISC figures. During the fourth quarter initial
development ore from both zones was delivered to the mill.
Capital expenditure for the year before reclamation adjustments amounted to US$131.5 million, 29% lower than the 2013
expenditure of US$185.5 million, mainly driven by lower expansionary capital spend as the new CIL circuit was completed in
2014. Capital expenditure for 2014 consisted mainly of capitalised underground development costs (US$60.2 million including
US$21.2 million related to development costs for the Bulyanhulu Upper East Lower West projects) and expansionary capital
investment relating to the new CIL circuit (US$44.5 million).
Buzwagi
Key statistics
(Unaudited)
Ounces produced
Ounces sold
1
1
AISC per ounce sold
Copper production
Copper sold
Mining information:
Tonnes mined
Ore tonnes mined
Processing information:
Ore milled
Head grade
Mill recovery
1
Capital Expenditure
2014
2013
oz
oz
US$/oz
US$/oz
Klbs
Klbs
Kt
Kt
Kt
g/t
%
US$/t
US$('000)
US$('000)
US$('000)
US$('000)
2014
2013
44,398
55,316
818
990
1,738
2,390
51,830
50,382
941
1,300
2,200
1,706
210,063
213,399
791
1,055
8,780
8,523
181,984
187,348
945
1,506
7,115
7,062
6,878
1,248
7,244
1,250
24,510
4,692
32,177
3,753
1,052
1.4
94.2%
43
945
1.9
88.8%
50
4,086
1.7
92.4%
41
4,400
1.5
88.2%
40
4,225
2,759
6,984
(1,318)
5,666
4,309
10,812
15,121
(2,318)
12,803
12,817
31,357
44,174
(1,131)
43,043
31,589
60,136
91,725
(9,230)
82,495
1
Gold production for the year of 210,063 ounces was 15% higher than 2013, driven by improved head grade as a result of mining
in the main ore zone and increased recoveries due to business improvement projects. This was partially offset by a 7% decrease
in throughput due to plant downtime for both planned and unplanned maintenance. Gold sold for the year amounted to 213,399
ounces, 14% above that of 2013 due to the higher production and 2% above production due to the sale of ounces on hand at the
start of the year.
Recoveries increased by 5% over 2013 as a result of business improvement initiatives in the second half of the year providing
improved blending and management of the CIL plant’s performance, coupled with the increased head grade.
Total tonnes mined for the year of 24.5 million tonnes were 24% lower than in 2013 due to changes in the mine plan compared to
2013, as already reported.
Copper production of 8.8 million pounds for the year was 23% higher than in 2013 driven by the higher concentrate production
and higher copper grades.
Cash costs for the year of US$791 per ounce sold were 16% lower than in 2013 (US$945). Cash costs were positively impacted
by a higher production base and savings driven by lower contracted services costs due to lower rates, lower energy costs which in
turn were affected by lower self-generation as a result of improved TANESCO reliability, lower labour costs as a result of the
reduction in the international workforce and lower corporate costs incurred and allocated to site. This was partially offset by lower
capitalised development costs as a result of the change in the mine plans and increased maintenance costs driven by equipment
breakdowns and plant maintenance.
AISC per ounce sold for the year of US$1,055 was 30% lower than in 2013 (US$1,506). This was driven by the lower cash cost
base and lower capitalised development and sustaining capital expenditure.
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Capital expenditure for the year before reclamation adjustments, of US$44.2 million was 52% lower than in 2013 (US$91.7
million). The significant change to the mine plan communicated in 2013 reduced required investment in waste movement and
sustaining capital. Key capital expenditure for the year included capitalised stripping costs (US$31.4 million), investment in tailings
and infrastructure (US$7.0 million) and component change out costs (US$5.4 million).
North Mara
Key statistics
(Unaudited)
Ounces produced
Ounces sold
1
1
AISC per ounce sold
Mining information:
Tonnes mined
Ore tonnes mined
Processing information:
Ore milled
Head grade
Mill recovery
1
Capital Expenditure
- Expansionary capital
2014
2013
oz
oz
US$/oz
US$/oz
2014
2013
70,655
75,760
668
912
60,358
61,050
636
1,075
273,803
274,540
623
947
256,732
260,945
659
1,227
3,653
788
4,104
678
16,265
2,569
21,027
2,601
Kt
g/t
%
US$/t
718
3.5
86.9%
70
643
3.4
86.0%
60
2,804
3.5
87.2%
61
2,643
3.5
86.8%
65
US$('000)
US$('000)
US$('000)
4,967
4,674
5,604
15,245
12,219
27,464
3,562
13,651
445
17,658
(4,506)
13,152
18,049
40,900
13,126
72,075
16,003
88,078
38,386
65,594
949
104,929
(11,271)
93,658
Kt
Kt
US$('000)
US$('000)
1
Production for the year of 273,803 ounces was 7% higher than the prior year primarily as a result of higher throughput rates,
which exceeded the prior year period by 6%. The higher milled tonnes were due to business improvement initiatives in both the
mining and milling areas. Gold ounces sold for the year of 274,540 ounces were in line with production, and 5% higher than the
prior year due to the higher production base.
Cash costs for the year of US$623 per ounce sold were 5% lower than in 2013 (US$659). Cash costs were positively impacted
by the higher production base, lower labour costs as a result of the reduction in the international workforce and lower
management fees, partially offset by lower capitalised mining costs due to changes in the mine plan compared to 2013.
AISC per ounce sold for the year of US$947 was 23% lower than in 2013 (US$1,227) predominantly due to lower cash costs,
capitalised development and sustaining capital expenditure in combination with the impact of increased sales volumes.
During Q4 2014, the Acacia Board approved the Gokona Underground project which is expected to produce 450,000 ounces of
gold over a 5 year life of mine, with an AISC of below US$750 per ounce sold. This project is now moving into the execution
phase with the underground exploration portal, which will help to develop a better understanding of the ore body. As at 31
December 2014 the portal was 301 metres advanced and it is expected to encounter development ore in the first quarter of
2015. Following the Board approval future capital expenditure will be classified as either sustaining capital or capitalised
development and is expected to amount to US$30 million in 2015. The total expansionary capital spend on the project in 2014
amounted to US$13.1 million.
Capital expenditure for the year before reclamation adjustments of US$72.1 million was 31% lower than in 2013 (US$104.9
million), due to lower capitalised development and lower sustaining capital expenditure, partially offset by higher expansionary
expenditure. Key capital expenditure included capitalised stripping costs (US$40.9 million), investments in component costs
(US$10.2 million) and tailings and infrastructure ($7.1 million).
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11
Exploration Review
Introduction
Overall, 2014 was a successful year of execution and delivery across our greenfield and brownfield exploration projects. During
the year, US$18.3 million of exploration activities were expensed, with a further amount of US$2.2 million relating to
exploration and evaluation activities being capitalised. Key highlights included our entry into highly prospective acreage in
Burkina Faso, successful drilling at our greenfield joint venture projects in Kenya, and further successful drilling results from our
brownfield exploration projects at Bulyanhulu from both surface and underground drilling.
Brownfield Exploration
In 2014, near-mine brownfield exploration successfully identified extensions to known resources. The brownfield exploration
programme was entirely focused on the Bulyanhulu ore body where surface and underground diamond core drilling returned
excellent results from step-out resource drilling on both Reef 1 and Reef 2 mineralised systems. This work has led to the
inclusion of a total of 2.3Moz to Indicated and Inferred resources and has extended the resource envelope by 1.5 kilometres to
the West.
Bulyanhulu
During 2014, Bulyanhulu undertook two diamond core exploration programmes, one from surface targeting Western extensions
of both the Reef 1 and Reef 2 veins series, and the second from underground, targeting depth extensions of Reef 2 in the East
of the mine.
Lower West Programme – Surface
The programme was designed to test the extensions of the Reef 1 structure from 400 metres to 1,200 metres west of the
current Bulyanhulu resource where historic drilling had shown indications of further gold mineralisation. Additionally, holes were
also drilled to intersect the Reef 2 vein series, and provide support that the Reef 2 system is mineralised up to 2 kilometres
west of the currently delineated underground resources.
A total of 9,721 metres of diamond core was drilled from surface holes during 2014, bringing the total for the programme to
14,373 metres in a total of 16 holes. Results from the drilling successfully showed the continuation of high-grade gold
mineralisation in the narrow reef-style structures in the western areas of both the Reef 1 and Reef 2 series. Better results from
the programme, which have all previously been reported, included significant intersections of:
Reef 1




BGMDD0054W1: 0.70m @ 18.7g/t Au from 1,435m - Reef 1
BGMDD0055W3: 0.79m @ 7.00g/t Au from 1,059m – Reef 1
Reef 2 Series

BGMDD0054:
2.0m @10.7g/t Au from 1,174m - Reef 2 series

BGMDD0054:
0.5m @ 37.9g/t Au from 1,335m - Reef 2 series

BGMDD0054W2: 1.02m @ 24.2g/t Au from 1,034m - Reef 2 series

BGMDD0054W6: 0.50m @ 31.1g/t Au from 681m - Reef 2 series


The results from 2013/2014 surface drilling programme have been very positive and demonstrated that gold mineralisation,
particularly on the Reef 2 vein system, continues west of the mine, which opens the potential for a significant resource
expansion on the Reef 2 series at relatively shallow levels (<1,000-1,600m) compared to the Reef 1 system.
East Deeps Underground Drilling
The programme targeted extensions of the East Zone high-grade ore shoot on the Bulyanhulu Reef 2 system outside of the
current resource model. The programme was drilled from several underground drill platforms with a total of 3,058 metres of
diamond core completed from three holes during 2014, bringing the total for the programme to 5 holes for 5,598 metres. The
results received during 2014 were all from the Reef 2 series, and included better intersections of:




UX4700-405: 1.0m @ 19.0g/t Au from 621m
UX4700-407: 1.3m @ 76.7g/t Au from 1203m
UX4700-408: 1.75m @ 13.6g/t Au from 1,042m
UX4700-410: 0.5m @ 18.4g/t Au from 1167m
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These Reef 2 drill intersections prove the continuity, at depth, of the high-grade East Zone mineralisation, and show that the
high-grade shoot remains open at depth.
Results from both of the drilling programmes were included in the year end resource and reserve calculations and increased
Indicated Resources by 760koz and Inferred Resources by 1.6Moz for a total addition of 2.3Moz. Furthermore, the surface
programme extended the extent of mineralisation by 1.5km to the west of the previous resource shell.
Future drilling programmes to both infill the area between the western extension areas and the current Reef 1 and Reef 2
resource areas and to infill East Deeps area will be completed from underground, by the Bulyanhulu Mine Geology Group, over
the next 3-5 years targeting a further addition of 3Moz of resources.
Greenfield Exploration
Throughout 2014, we have continued our focus on identifying new greenfields exploration opportunities to complement our
existing exploration portfolio. We have significantly progressed our understanding of the West Kenya joint venture properties
and have seen very encouraging results from reconnaissance and diamond core drilling. Additionally, we entered into a joint
venture with Sarama Resources Limited, over a large and highly prospective land package in the Houndé Belt of Burkina Faso.
We continue to look throughout Africa for opportunities to further enhance and diversify our exploration portfolio through low
cost joint ventures or option agreements.
Kenya
West Kenya Joint Venture Projects
An extensive exploration programme was completed in 2014 across the entire area of Acacia’s West Kenya projects including
2
aircore drilling of 1,171 holes for 42,232 metres, 10,759 soil samples, 1,060km of mapping and 190 line kilometres of IP
surveys significantly advancing our understanding of the Busia-Kakamega greenstone belt and developing in excess of 40 new
targets for follow-up work.
Kakamega Dome Camp
Aircore drilling tested several gold-in-soil anomalies along the “Liranda Corridor” on the south side of the Kakamega Dome.
The aircore programme was completed in H1 2014 and was very successful with 247 holes of the 992 holes completed since
the programme commenced in 2013, returning anomalous results (>0.1g/t Au) of which 87 holes intersected zones of >0.50g/t
Au. Better results from the 2014 activity included:







KDAC0312: 3m @ 15.2 g/t Au from 41m and 9m @ 1.71 g/t Au from 62m
KDAC0617: 6m @ 7.7 g/t Au, including 3m @ 13.7 g/t Au
KDAC0832: 12m @ 2.77 g/t Au
KDAC0841: 15m @ 1.94 g/t Au and 6m @ 4.35 g/t Au
KDAC0858: 6m @ 22.3 g/t Au, including 3m @ 44 g/t Au
KDAC0877: 12m @ 12.6g/t Au, including 3m @ 46.3 g/t Au
KDAC 0998: 6m @ 3.20 g/t Au from 105m
The gold mineralisation has been intersected in a variety of rock types along the Liranda Corridor, which indicates opportunities
to test for different types and styles of gold deposits in this area. The majority of gold mineralisation intersected to date has
been within weathered (oxidised) bedrock, often associated with quartz veining.
The aircore results are very encouraging given the current line spacing of the aircore traverses varies between 200 metres and
400 metres and the average depth of drilling to date is a relatively shallow at approximately 50 metres. In late 2014 we
commenced a diamond core drill programme to investigate the orientation and continuity of gold mineralisation intersected in
the aircore drilling to date. By year end a total of 20 holes had been completed for 3,709 metres of diamond core. Delays in
the transport and processing of drill core samples over the end-of-year period resulted in a limited number of results being
received and processed through QA/QC procedures by the period end.
Initial interpretation of diamond core drill results and structural data indicates that in a number of areas drilling has not
intersected the mineralised interval and subsequently follow-up drill holes have been re-oriented to assess the geology and
mineralised structures at the appropriate drill angle. A number of scissor holes have now been drilled to complete this task.
Lake Zone Camp
In tandem with the aircore drilling, we are undertaking gradient and pole-dipole IP and Resistivity across selected gold-in-soil
anomalies throughout the Lake Zone Camp in the central and western areas of the project. A total of 190 line kilometres of
surveys were completed in 2014. Ten targets showing distinct resistivity and/or chargeability zones coincident with the gold-insoil anomalies have been delineated and should be considered as priority targets for future drilling programmes. The Abimbo
target in the far west of the West Kenya project area is expected to be the first target tested in 2015; this target is a Gold2
Copper-Molybdenum-Arsenic soil geochemical anomaly that extends over 6km and is co-incident with a large IP anomaly.
LSE:ACA
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Burkina Faso
South Houndé Joint Venture
In November, Acacia entered into an earn-in agreement with Sarama Resources Ltd (“Sarama”) whereby Acacia can earn an
interest of up to 70% with the expenditure of up to US$14 million over a number of staged payments, at Sarama’s highly
prospective South Houndé Project in Burkina Faso (the “Project”). Acacia may increase its interest in the Project to 75% on
satisfaction of certain conditions relating to resource delineation.
2
The Project comprises seven contiguous exploration licences covering a total area of 814km in South-West Burkina Faso
approximately 300km south-west of Ouagadougou and 90km southeast of Bobo-Dioulasso, the second largest city in Burkina
Faso. Access to the area is via a major sealed bitumen road from Ouagadougou to Bobo-Dioulasso and then via a network of
secondary and tertiary roads. The Project area is sparsely populated.
Sarama has identified a number of high-quality exploration targets including the 1.5Moz Au Tankoro Resource. The Tankoro
Resource extends over 5.5km strike within a 25km long mineralised corridor, one of three such mineralised corridors on the
property. Previous exploration including surface geochemistry, geophysics (IP), aircore and reverse circulation drilling have
defined a number of high quality exploration targets along strike from the Tankoro resource and on multiple sub-parallel northnortheast trending corridors within the South Houndé Project.
Going forward, exploration programmes will target high grade extensions to the existing Tankoro resource base, both along
strike and at depth. Regional programmes will target new high-value discoveries across the Project through the use of
geophysics (IP and aeromagnetic surveys) and extensive drilling programmes.
The South Houndé JV agreement was signed in November 2014 with an initial 3-month work programme commencing shortly
thereafter. By the end of 2014, soil sampling had commenced on the Tyikoro licence and an induced polarisation (IP) survey
extending the Tankoro IP grid had been completed. Additionally, a total of 59 aircore holes (3,377 metres), seven reverse
circulation holes (944 metres) and two diamond core holes (624 metres) had been completed across several targets; we
expect to release initial results during Q1 2015.
It is anticipated that two diamond rigs and one reverse circulation rig will be in operation for most of Q1 2015 following up
positive aircore results and IP targets, as well as testing for high-grade plunge extensions to the MC and MM zones .
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Financial Review
The continued strong operational performance during the year was partially offset by the continuing weak gold price environment
in 2014, with the average realised gold price US$121 per ounce lower than the prior year. This is reflected in the Acacia Group’s
financial results for the year ended 31 December 2014:





Revenue of US$930.2 million was US$1.2 million higher than 2013 driven by an increase in sales volumes of
60,083 ounces (9%), which offset a 9% decrease in the average realised gold price to US$1,258 per ounce sold
(US$1,379 per ounce sold in the prior year).
Cash costs decreased to US$732 per ounce sold from US$812 in 2013, driven by the higher production base,
lower labour costs, lower warehouse costs and lower corporate costs incurred and allocated to site.
All-in sustaining costs decreased to US$1,105 per ounce sold from US$1,346 in 2013 due to lower cash costs,
lower sustaining capital expenditures and capitalised development costs combined with the impact of increased
sales volumes on per unit costs.
EBITDA increased by 5% to US$252.7 million, mainly driven by lower direct mining costs.
Operational cash flow of US$289.5 million was 55% higher than 2013, primarily as a result of reduced operating
costs and decreased working capital investment due to a decrease in other current assets, mainly driven by VAT
refunds received from the Tanzanian Government, an increase in trade payables due to the timing of payments,
partially offset by an investment in gold inventory and an increase in dore and concentrate receivables.
The following review provides a detailed analysis of our consolidated results for the year ended 31 December 2014 and the main
factors affecting financial performance. It should be read in conjunction with the unaudited consolidated financial information and
accompanying notes on pages 28 to 46, which have been prepared in accordance with International Financial Reporting
Standards as adopted for use in the European Union (“IFRS”).
Market overview
Our financial results are impacted by external drivers in the form of commodity prices, exchange rates and the cost of energy.
Their impact in 2014 and our positioning going into 2015 are set out below.
The market price of gold has a significant impact on Acacia’s operating earnings and its ability to generate cash flows. Gold
price volatility continued to be elevated during 2014 with the gold price ranging from a high of US$1,385 per ounce to a low of
US$1,142 per ounce and closing the year at US$1,206 per ounce. Market gold prices averaged US$1,266 per ounce in 2014, a
10% decline from the prior year average of US$1,411.
The price of gold has been influenced by US Dollar strength, low interest rates worldwide, investment demand and the
monetary policies implemented by major world central banks. Exchange traded fund (“ETF”) outflows were in part met by
strong physical demand in Asia with jewellery demand in China accounting for one third of the world market. Gold is still viewed
as a portfolio diversifier by central banks, which now hold a significant portion of global bullion reserves and continue to
increase holdings.
As the US economy improved during 2014, the US Federal Reserve started to taper its bond purchase programme which
culminated in September 2014. Equities performed well and the dollar appreciated which together with divergence in major
central bank policies, caused gold prices to be extremely volatile during 2014.
We continued our policy of no gold hedging during 2014.
Copper
Acacia also produces copper as a co-product which is recognised as a part of revenue. Copper traded between US$2.86 and
US$3.37 per pound in 2014. The average market copper price for 2014 was US$3.11 compared with US$3.32 per pound in
2013. Key external drivers of the copper prices include Chinese demand, the world’s largest consumer, the US growth outlook,
existing stock levels and supply growth.
During 2014 we utilised an option collar strategy whereby 75% of our estimated copper production was hedged at an average
floor price of US$3.12 per pound and an average ceiling price of US$3.41 per pound, resulting in a realised gain of US$408
thousand for the year. In 2015 we have continued this strategy and put in place floor protection on 24% of our expected copper
production at an average floor price of US$3.08 per pound and an average ceiling price of US$3.35 per pound.
Fuel
Brent Crude oil traded between US$57 and US$115 per barrel and averaged US$100 per barrel (2013: US$109 per barrel)
while trading at around US$58 per barrel at the end of the year. We consumed approximately 496,000 barrels of diesel in 2014
(2013: 610,000). Diesel fuel is refined from crude oil and is therefore subject to the same price volatility affecting crude oil
prices and has a significant impact on our production costs. Crude oil has been impacted by the strength of the US dollar and
increased supplies from North America that resulted in an oversupply. Our overall oil exposure is heavily impacted by grid
power reliability across all three operations and mining activity at our open pit mines. During 2014 we utilised an option collar
strategy to hedge 75% of our estimated diesel consumption at an average floor price of US$88 per barrel and average capped
LSE:ACA
15
price of US$105 per barrel. In 2015 we have continued this strategy and put in place protection on approximately 75% and
64% of our expected 2015 and 2016 consumption respectively with average floors of US$97 and US$69 and a capped price of
US$110 and US$90 per barrel respectively.
Currency Exchange rates
A portion of Acacia’s expenditure is incurred in currencies other than US dollars. The exposure relating to other currencies is
approximately 26% of the Company’s total expenditure, of which the main contributing currencies are the Tanzanian shilling
and the South African rand. In 2014, the rand declined significantly against the US dollar as the US dollar strengthened,
domestic factors persisted and investors shunned riskier rand-denominated assets. The Tanzanian shilling remained relatively
stable as the Bank of Tanzania imposed exchange controls throughout the year. We have put in place floor protection on
approximately 75% of our expected rand operating expenditures for 2015 with average floors of ZAR10.43. In light of potential
rand weakness we have average ceilings of ZAR12.80 for 2015.
Discontinued operation – Tulawaka
Following the acquisition of Tulawaka by STAMICO in February 2014, the financial results of Tulawaka have been presented as
discontinued operations in the consolidated financial information. The comparative results in the consolidated income statement
have been presented as if Tulawaka had been discontinued from the start of the comparative period, effectively excluding the net
result relating to Tulawaka from individual income statement lines and aggregating it in one line called “Net profit/(loss) from
discontinued operations”. A reconciliation to group results is set out on page 20.
The financial performance below is stated for continuing operations.
Revenue
Revenue for 2014 of US$930.2 million was in line with 2013. The 9% increase in sales volumes (60,083 ounces) was more than
offset by a 9% decrease in the realised gold prices from US$1,379 per ounce sold in 2013 to US$1,258 in 2014 as a result of
lower market prices. The increase in sales ounces was due to the higher production base.
Included in total revenue is co-product revenue of US$45.3 million for 2014, which increased by 5% from the prior year period
(US$43.0 million) due to higher copper sales volumes, partly offset by a lower realised copper price. The 2014 average realised
copper price of US$3.01 per pound compared unfavourably to that of 2013 (US$3.24 per pound), and was driven by global
market factors regarding supply and demand.
Cost of sales
Cost of sales was US$688.3 million for 2014, representing a decrease of 4% on the prior year (US$713.8 million). The key
aspects impacting the cost of sales for the year were:


Lower depreciation and amortisation charges driven by the lower capital base employed for the year slightly offset by
the higher production base; and
Cost savings across labour, energy and fuel and general administration costs, combined with an increased investment
in gold inventory relating to ore stockpiles at Buzwagi and gold in circuit.
This was partially offset by:



A lower proportion of mining costs being capitalised at Buzwagi and North Mara due to the change in mine plans;
Higher maintenance costs at Buzwagi and Bulyanhulu due to increased maintenance activity as a result of a focus on
implementing improved maintenance practices and the impact of maintenance cycles; and
Higher refining charges due to increased sales ounces.
The table below provides a breakdown of cost of sales:
(US$'000)
(Unaudited)
Cost of Sales
Direct mining costs
Third party smelting and refining fees
Royalty expense
Depreciation and amortisation
Total
2014
2013
138,446
7,228
10,830
35,228
191,732
LSE:ACA
126,826
5,160
9,396
28,388
169,770
2014
2013
493,933
24,937
41,284
128,124
688,278
508,166
16,790
40,871
147,979
713,806
16
A detailed breakdown of direct mining expenses is shown in the table below:
(US$'000)
(Unaudited)
Direct mining costs
Labour
Energy and fuel
Consumables
Maintenance
Contracted services
General administration costs
Gross direct mining costs
Capitalised mining costs
Total direct mining costs
2014
2013
32,003
29,974
27,988
29,977
28,695
17,786
166,423
(27,977)
138,446
36,757
30,565
24,612
21,970
24,723
27,842
166,469
(39,643)
126,826
2014
2013
132,656
130,486
103,770
104,452
96,785
77,360
645,509
(151,576)
493,933
152,870
133,797
104,188
90,926
96,957
92,902
671,640
(163,474)
508,166
Gross direct mining costs of US$645.5 million for 2014 were 4% lower than 2013 (US$671.6 million). Individual cost components
comprised:

A 13% reduction in labour costs, mainly as a result a 28% reduction in international employees across the sites, driven
by localisation efforts.

A 2% reduction in energy and fuel expenses, driven primarily by lower diesel usage at Buzwagi as a result of reduced
mining and processing activity and less self-generation due to increased reliance on supply from TANESCO, partially
offset by higher costs at Bulyanhulu due to the higher mining and processing activity coupled with higher TANESCO
pricing.

A 15% increase in maintenance costs, driven by increased maintenance investment, specifically relating to mining
equipment repairs at Buzwagi and Bulyanhulu, and to improve group maintenance practices.

A 17% decrease in general administration costs, across all sites driven by lower warehouse costs combined with lower
corporate costs incurred and allocated to sites.
Capitalised direct mining costs, consisting of capitalised development costs and the change in inventory charge, is made up as
follows:
(US$'000)
(Unaudited)
Capitalised direct mining costs
Capitalised development costs
(Investment in)/ drawdown of inventory
Total capitalised direct mining costs
2014
2013
(20,248)
(7,729)
(27,977)
(35,254)
(4,389)
(39,643)
2014
2013
(122,782)
(28,794)
(151,576)
(173,245)
9,771
(163,474)
Capitalised development costs were 29% lower than 2013, driven by the decrease in waste tonnes mined at Buzwagi and
North Mara due to the revised mine plans previously announced. This was in part offset by an increase in capitalised
development costs at Bulyanhulu. The investment in inventory was US$28.8 million, higher than in 2013 due to a build-up of
ore inventory at Buzwagi due to lower throughput rates and increased gold in circuit inventory at Bulyanhulu. This was slightly
offset by a drawdown of ore stockpiles at North Mara as a result of the improved throughput rate and plant performance.
LSE:ACA
17
Central costs
Corporate administration expenses totalled US$32.7 million for 2014, a 4% decrease on 2013 (US$34.0 million) driven by further
savings in labour costs as a result of the continued restructuring of the corporate function and savings in travel costs, partially
offset by increased legal fees. The increase in the share based payment expense was a result of the stronger share price
performance, specifically when compared to our peers, impacting on the valuation.
(US$'000)
(Unaudited)
Stock based payments
Total central costs
2014
2013
10,274
2,416
12,690
8,273
625
8,898
2014
2013
32,685
8,388
41,073
33,970
(1,813)
32,157
Exploration and evaluation costs of US$18.3 million were incurred in 2014, 8% higher than the US$16.9 million spent in 2013.
The key focus areas for 2014 were extension drilling on both Reef 1 and 2 at Bulyanhulu (US$7.2 million), and exploration
programmes at the West Kenya Joint Venture project amounting to US$5.6 million. Also included in exploration costs is US$1.5
million relating to our investment and share of expenses of the South Houndé project in Burkina Faso.
Corporate social responsibility costs incurred amounted to US$10.8 million for the year compared to the prior year of US$12.2
million. The main projects for 2014 related to Village Benefit Implementation Agreements (“VBIAs”) at North Mara and larger
contributions to general community projects funded from the Acacia Maendeleo Fund; of the total spend for 2014, US$8.5
million was spent on Acacia Maendeleo Fund projects and VBIA’s.
Other charges
Other charges amounted to US$47.9 million, 58% higher than 2013 (US$30.4 million). The main contributors were: (i) Acacia’s
ongoing programme of zero cost collar contracts as part of a programme to mitigate the negative impact of copper, rand and
fuel cost market volatility. The entry into these arrangements resulted in a combined mark-to-market revaluation loss of
US$13.6 million, due to the fact that these arrangements do not qualify for hedge accounting combined with a significant
decline in the market price of oil, (ii) non-cash foreign exchange losses mainly related to the indirect tax receivables due to the
weakening of the Tanzanian shilling (US$13.5 million), (iii) Operational Review costs, including external services and
retrenchment costs of US$13.7 million and (iv) legal costs of US$6.7 million. Refer to note 8 of the condensed financial
information for further details.
Finance expense and income
Finance expense of US$10.0 million for 2014 was 5% higher than 2013 (US$9.6 million). The key drivers were accretion
expenses relating to the discounting of the environmental reclamation liability (US$4.7 million) and US$2.4 million (US$3.1
million in 2013) relating to the servicing of the US$150 million undrawn revolving credit facility. Other costs include bank charges
and interest on finance leases. Interest costs relating to the project financing on the Bulyanhulu CIL Plant Expansion project
were capitalised to the cost of the asset up to 30 September 2014 due to the facility being directly attributable to the asset. For
the year ended 31 December 2014 US$2.9 million of borrowing costs have been capitalised to the project. From 1 October 2014,
borrowing costs relating to the CIL Bulyanhulu Expansion project were expensed as the new CIL circuit was fully commissioned.
The first principal repayment for this facility will be made in July 2015.
Finance income relates predominantly to interest charged on non-current receivables and interest received on money market
funds. Refer to note 9 of the condensed financial information for details.
Taxation matters
The taxation charge was US$26.0 million for 2014, compared to a credit of US$188.0 million in 2013. The tax charge was made
up solely of deferred tax charges and reflects the impact of the profitability on a year-to-date basis. The effective tax rate in 2014
amounted to 23% compared to 20% in 2013. The increase is mainly driven by the increase in taxable income and the utilisation
of previously unrecognised tax losses at Buzwagi (US$21.1 million) all recorded in Q4 2014, driven by the mine’s anticipated
future profitability as per the revised mine plan.
LSE:ACA
18
Net earnings from continuing operations
As a result of the factors discussed above, net profit from continuing operations for 2014 was US$89.2 million, against the prior
year loss of US$740.8 million. Lower costs of sales and no impairment charges incurred in 2014 contributed to the variance. This
was partially offset by the higher tax charge and other charges.
Earnings per share
The earnings per share for 2014 amounted to US22.1 cents, an increase of US212.5 cents from the prior year loss of US190.4
cents. The increase was driven by increased net profit with no change in the underlying issued shares. Earnings per share from
continuing operations amounted to US21.8 cents.
Discontinued operations
Below is a reconciliation showing Group financial performance on a line by line basis, with Tulawaka being classified as a
discontinued operations for 2013 and 2014.
Year ended 31 December 2014
(US$’000)
(Unaudited)
Revenue
Cost of sales
Gross profit/ (loss)
Impairment charges
Other charges
Profit/(loss) before net finance expense
and taxation
Finance income
Finance expense
Tax (expense)/ credit
Net profit/ (loss)
Continuing
operations
930,248
(688,278)
241,970
(32,685)
(8,388)
(18,284)
(10,787)
(47,921)
Discontinued
operations
(118)
805
123,905
1,324
(10,043)
115,186
(25,977)
89,209
687
77
(38)
726
726
LSE:ACA
Total
930,248
(688,278)
241,970
(32,685)
(8,388)
(18,284)
(10,905)
(47,116)
Continuing
operations
929,004
(713,806)
215,198
(33,970)
1,813
(16,927)
(12,237)
(1,044,310)
(30,424)
Discontinued
operations
13,514
(30,368)
(16,854)
(1,351)
40
(3,259)
(16,701)
(19,442)
Total
942,518
(744,174)
198,344
(35,321)
1,853
(16,927)
(15,496)
(1,061,011)
(49,866)
124,592
1,401
(10,081)
115,912
(25,977)
89,935
(920,857)
1,670
(9,552)
(928,739)
187,959
(740,780)
(57,567)
30
(116)
(57,653)
(57,653)
(978,424)
1,700
(9,668)
(986,392)
187,959
(798,433)
19
Financial position
Acacia had cash and cash equivalents on hand of US$293.9 million as at 31 December 2014 (US$282.4 million as at 31
December 2013). The Group’s cash and cash equivalents are with counterparties whom the Group considers to have an
appropriate credit rating. Location of credit risk is determined by physical location of the bank branch or counterparty.
Investments are held mainly in United States dollars, with cash and cash equivalents in other foreign currencies maintained for
operational requirements.
During 2013, a US$142 million facility was put in place to fund the bulk of the costs of the construction of the Bulyanhulu CIL
Plant Expansion project (“Project”). The Facility is collateralised by the Project, and has a term of seven years with a spread over
Libor of 250 basis points. The seven year Facility is repayable in equal instalments (bi-annual) over the term of the Facility, after
a two year repayment holiday period. The interest rate has been fixed at 3.6% through the use of an interest rate swap. The full
facility of US$142 million was drawn in 2013 with the first repayment due in H2 2015.
The above complements the existing undrawn revolving credit facility of US$150 million which runs until November 2017.
The net book value of property, plant and equipment increased from US$1.28 billion in December 2013 to US$1.43 billion in
December 2014. The main capital expenditure drivers have been explained in the cash flow used in the investing activities
section below, and have been offset by depreciation charges of US$124.1 million. Refer to note 12 to the condensed financial
information for further details.
Total indirect tax receivables, net of a discount provision applied to the non-current portion, decreased from US$159.8 million as
at 31 December 2013 to US$108.1 million as at 31 December 2014. The decrease was mainly due to refunds of US$132.8
million received during 2014, which was partially offset by a net increase in current VAT receivables of approximately US$81
million. The net deferred tax position decreased from an asset of US$14.9 million as at 31 December 2013 to a liability of
US$11.1 million as at 31 December 2014. This was mainly as a result of taxable income in 2014, the impact of timing differences
and the utilisation of previously unrecognised tax losses at Buzwagi (US$21.1 million), driven by the mine’s anticipated future
profitability as per the revised mine plan.
Net assets attributable to owners of the parent increased from US$1.93 billion in December 2013 to US$2.0 billion in December
2014. The increase reflects the current year profit attributable to owners of the parent of US$90.4 million and the payment of the
final 2013 dividend of US$8.2 million and the 2014 interim dividend of US$5.7 million.
Cash flow generation and capital management
Cash flow – continuing and discontinued operations
For the three months ended 31 December
(US$’000)
(Unaudited)
2014
2013
Cash generated from operating activities
60,993
48,193
Cash used in investing activities
(50,305)
(84,865)
Cash (used in)/ provided by financing activities
(2,616)
30,487
Increase/ (decrease) in cash
8,072
(6,185)
Foreign exchange difference on cash
(950)
(69)
Opening cash balance
286,728
288,663
Closing cash balance
293,850
282,409
2014
289,528
(256,992)
(19,016)
13,520
(2,079)
282,409
293,850
2013
187,115
(386,850)
82,322
(117,413)
(1,526)
401,348
282,409
Cash flow from operating activities was US$289.5 million for 2014, an increase of US$102.4 million, when compared to 2013
(US$187.1 million). The increase relates to the increased gold production and improved cost performance as well as an
increase in inflows associated with working capital of US$61.3 million when compared to 2013. The working capital inflow
relates to a decrease in other current assets of US$28.0 million, mainly driven by VAT refunds received from the Tanzanian
Government and an increase in trade payables of US$22.7 million due to the timing of payments compared to the prior year.
This was partially offset by an investment in gold inventory of US$29.2 million and an increase in doré and concentrate
receivables of US$10.0 million.
Cash flow used in investing activities was US$257.0 million for 2014, a decrease of 34% when compared to 2013 (US$386.9
million), driven by lower sustaining capital expenditure at Buzwagi and North Mara, lower expansionary capital expenditure
due to higher spending on the Bulyanhulu CIL Expansion project in 2013 and lower capitalised development expenditure at
Buzwagi and North Mara.
LSE:ACA
20
A breakdown of total capital and other investing capital activities for the year ended 31 December is provided below:
(US$’000)
(Unaudited)
2014
2013
Sustaining capital
Expansionary capital
Capitalised development
Total cash capital
Non-cash rehabilitation asset adjustment
1
Non-cash sustaining capital
53,138
61,136
132,408
246,682
21,013
1,244
84,474
117,469
171,158
373,101
(30,740)
11,967
Other investing capital
2
- Non-current asset movement
- Cash flow related to the sale of Tulawaka
268,939
354,328
(1,323)
(11,633)
13,749
-
1
Total non-cash sustaining capital includes the impact of capital accruals excluded from cash sustaining capital of US$6.9 million as well as FX adjustments on
revaluation of assets.
2
Non-current asset movements relates to the investment in the land acquisitions reflected as prepaid operating leases and Tanzania government receivables.
Sustaining capital
Sustaining capital expenditure includes the investment in mine equipment of US$21.8 million, mainly relating to component
change outs at North Mara and Bulyanhulu and investment in tailings and infrastructure at Bulyanhulu (US$18.3 million), North
Mara (US$7.1 million) and Buzwagi (US$7.0 million).
Expansionary capital
Expansionary capital expenditure consisted mainly of the Bulyanhulu CIL Expansion project (US$44.5 million) and the Gokona
Underground project at North Mara ($13.1 million).
Capitalised development capital includes capitalised stripping for North Mara (US$40.9 million) and Buzwagi (US$31.4 million)
and Bulyanhulu capitalised underground development (US$60.2 million).
Non-cash capital
Non-cash capital was US$22.3 million and consisted mainly of reclamation asset adjustments (US$21.0 million) and the full year
increase in capital accruals (US$6.9 million), partially offset by the revaluation of Rand based assets. The reclamation
adjustments were driven by changes in estimates of future reclamation cash flows combined with lower US risk free rates driving
lower discount rates.
Other investing capital
The sale of Tulawaka to STAMICO resulted in a cash payment of the balance of the rehabilitation fund, less the transaction
consideration on completion and amounted to US$11.6 million. During 2014 North Mara incurred land purchases totalling
US$9.0 million. This was offset by a reduction in other non-current assets of US$7.4 million.
Cash flow used in financing activities for the year ended 31 December 2014 was an outflow of US$19.0 million, a decrease of
US$101.3 million on an inflow of US$82.3 million in 2013. The outflow relates to payment of the final 2013 dividend of US$8.2
million, payment of the 2014 interim dividend of US$5.7 million and finance lease payments of US$5.1 million.
Dividend
An interim dividend of US1.4 cents per share was paid to shareholders on 22 September 2014. The Board of Directors have
recommended a final dividend for 2014 of US2.8 cents per share, subject to the shareholders approving this recommendation at
the AGM.
LSE:ACA
21
Significant judgements in applying accounting policies and key sources of estimation uncertainty
Many of the amounts included in the consolidated financial information require management to make judgements and/or
estimates. These judgements and estimates are continuously evaluated and are based on management’s experience and best
knowledge of the relevant facts and circumstances, but actual results may differ from the amounts included in the consolidated
financial information included in this release. Information about such judgements and estimation is included in the accounting
policies and/or notes to the consolidated financial statements, and the key areas are summarised below.
Areas of judgement and key sources of estimation uncertainty that have the most significant effect on the amounts recognised in
the consolidated financial statements include:














Estimates of the quantities of proven and probable gold reserves;
The capitalisation of production stripping costs;
The capitalisation of exploration and evaluation expenditures;
Review of goodwill, tangible and intangible assets’ carrying value, the determination of whether these assets are impaired
and the measurement of impairment charges or reversals;
The estimated fair values of cash generating units for impairment tests, including estimates of future costs to produce
proven and probable reserves, future commodity prices, foreign exchange rates and discount rates;
The estimated useful lives of tangible and long-lived assets and the measurement of depreciation expense;
Property, plant and equipment held under finance leases;
Recognition of a provision for environmental rehabilitation and the estimation of the rehabilitation costs and timing of
expenditure;
Whether to recognise a liability for loss contingencies and the amount of any such provision;
Whether to recognise a provision for accounts receivable, a provision for obsolescence on consumables inventory and the
impact of discounting the non-current element of the indirect tax receivable;
Recognition of deferred income tax assets, amounts recorded for uncertain tax positions, the measurement of income tax
expense and indirect taxes;
Determination of the cost incurred in the productive process of ore stockpiles, gold in process, gold doré/bullion and
concentrate, as well as the associated net realisable value and the split between the long term and short term portions;
Determination of fair value of derivative instruments; and
Determination of fair value of stock options and cash-settled share based payments.
LSE:ACA
22
Going concern statement
Acacia Group’s business activities, together with factors likely to affect its future development, performance and position are set
out in the operational and financial review sections of this report. The financial position of Acacia Group, its cash flows, liquidity
position and borrowing facilities are described in the preceding paragraphs of this financial review.
At 31 December 2014, the Group had cash and cash equivalents of US$293.9 million with a further US$150 million available
under the undrawn revolving credit facility which remains in place until November 2017. Total borrowings at the end of the year
amounted to US$142 million, of which the first repayment is only repayable in H2 2015.
Included in other current assets are amounts due to the Group relating to indirect taxes of US$45.9 million which are expected to
be received within 12 months, but these will be offset to an extent by new claims submitted for input taxes incurred during 2015.
The refunds remain dependent on processing and payments of refunds by the Government of Tanzania.
We expect that the above, in combination with the expected operational cash flow generated during 2015, will be sufficient to
cover the capital requirements and other commitments for the foreseeable future.
In assessing Acacia Group’s going concern status the Directors have taken into account the above factors, including the financial
position of Acacia Group and in particular its significant cash position, the current gold and copper price and market expectations
for the same in the medium term, and Acacia Group’s capital expenditure and financing plans. After making appropriate
enquiries, the Directors consider that Acacia and Acacia Group as a whole has adequate resources to continue in operational
existence for the foreseeable future and that it is appropriate to adopt the going concern basis in preparing the financial
statements.
LSE:ACA
23
Non-IFRS Measures
Acacia has identified certain measures in this report that are not measures defined under IFRS. Non-IFRS financial measures
disclosed by management are provided as additional information to investors in order to provide them with an alternative method
for assessing Acacia’s financial condition and operating results. These measures are not in accordance with, or a substitute for,
IFRS, and may be different from or inconsistent with non-IFRS financial measures used by other companies. These measures
are explained further below.
Average realised gold price per ounce sold is a non-IFRS financial measure which excludes from gold revenue:
- Unrealised mark-to-market gains and losses on provisional pricing from copper and gold sales contracts; and
- Export duties.
Cash cost per ounce sold is a non-IFRS financial measure. Cash costs include all costs absorbed into inventory, as well as
royalties, and production taxes, and exclude capitalised production stripping costs, inventory purchase accounting adjustments,
unrealised gains/losses from non-hedge currency and commodity contracts, depreciation and amortisation and corporate social
responsibility charges. Cash cost is calculated net of co-product revenue.
The table below provides a reconciliation between cost of sales and total cash cost to calculate the cash cost per ounce sold.
(US$'000)
2014
2013
191,732
169,770
(Unaudited)
Total cost of sales
2014
2013
688,278
713,806
Deduct: depreciation and amortisation
Deduct: Co-product revenue
Total cash cost
(35,228)
(11,910)
144,594
(28,388)
(11,181)
130,201
(128,124)
(45,253)
514,901
(147,979)
(43,012)
522,815
Total ounces sold
Cash cost per ounce
Attributable cash cost per ounce
194,243
744
744
168,167
774
774
703,680
732
732
643,597
812
15
827
Refer to note 5 to the condensed financial information for a reconciliation to all-in sustaining cost per ounce sold.
The presentation of these statistics in this manner allows Acacia to monitor and manage those factors that impact production
costs on a monthly basis. Cash cost per ounce sold is calculated by dividing the aggregate of these costs by gold ounces sold.
Cash costs and cash cost per ounce sold are calculated on a consistent basis for the periods presented.
All-in sustaining cost (AISC) is a non-IFRS financial measure. The measure is in accordance with the World Gold Council’s
guidance issued in June 2013. It is calculated by taking cash cost per ounce sold and adding corporate administration costs,
reclamation and remediation costs for operating mines, corporate social responsibility expenses, mine exploration and study
costs, realised gains and/or losses on operating hedges, capitalised stripping and underground development costs and
sustaining capital expenditure. This is then divided by the total ounces sold. A reconciliation between cash cost per ounce sold
and AISC for the key business segments is presented below:
(Unaudited)
(US$/oz sold)
Rehabilitation
Mine exploration
CSR expenses
Sustaining capital
Total continuing operations
Three months ended 31 December 2014
Bulyanhulu
North
Mara
Three months ended 31 December 2013
ACA Group
ongoing
operations
Buzwagi
Bulyanhulu
North
Mara
Buzwagi
ACA Group
ongoing
operations
772
49
7
6
(2)
11
225
157
668
39
16
1
22
62
104
818
39
(8)
4
10
50
77
744
53
12
9
18
111
141
776
69
(1)
4
2
2
189
77
636
42
(1)
24
8
46
224
96
941
47
(1)
8
1
4
215
85
774
49
4
12
4
22
209
89
1,225
912
990
1,088
1,118
1,075
1,300
1,163
Total
LSE:ACA
-
8
1,088
1,171
24
(Unaudited)
(US$/oz sold)
Rehabilitation
Mine exploration
CSR expenses
Sustaining capital
Total continuing operations
Buzwagi
ACA Group
ongoing
operations
812
49
3
7
2
7
279
107
623
37
1
18
2
18
149
99
791
38
1
5
1
12
147
60
732
46
12
11
1
15
188
100
890
72
7
3
6
233
133
659
39
(1)
29
12
31
251
207
945
52
(1)
15
2
4
321
168
812
53
(3)
18
6
19
266
175
1,266
947
1,055
1,105
1,344
1,227
1,506
1,346
Bulyanhulu
North
Mara
Total
Bulyanhulu
North
Mara
Buzwagi
ACA Group
ongoing
operations
-
16
1,105
1,362
AISC is intended to provide additional information on the total sustaining cost for each ounce sold, taking into account
expenditure incurred in addition to direct mining costs, depreciation and selling costs.
Cash cost per tonne milled is a non-IFRS financial measure. Cash costs include all costs absorbed into inventory, as well as
royalties, by-product credits, and production taxes, and exclude capitalised production stripping costs, inventory purchase
accounting adjustments, unrealised gains/losses from non-hedge currency and commodity contracts, depreciation and
amortisation and corporate social responsibility charges. Cash cost is calculated net of co-product revenue. Cash costs per
tonne milled are calculated by dividing the aggregate of these costs by total tonnes milled.
EBITDA is a non-IFRS financial measure. Acacia calculates EBITDA as net profit or loss for the period excluding:
-
Income tax expense;
Finance expense;
Finance income;
Depreciation and amortisation; and
Impairment charges of goodwill and other long-lived assets.
EBITDA is intended to provide additional information to investors and analysts. It does not have any standardised meaning
prescribed by IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in
accordance with IFRS. EBITDA excludes the impact of cash costs of financing activities and taxes, and the effects of changes in
operating working capital balances, and therefore is not necessarily indicative of operating profit or cash flow from operations as
determined under IFRS. Other companies may calculate EBITDA differently.
A reconciliation between net profit for the period and EBITDA is presented below:
(US$’000)
(Unaudited)
2014
2013
Net profit/ (loss) for the period
21,136
(100,342)
Plus income tax (credit)/ expense
(13,906)
(19,232)
Plus depreciation and amortization*
35,228
29,258
Plus: impairment charges/ write-offs
133,320
Plus finance expense
3,194
2,476
Less finance income
(392)
(614)
EBITDA
45,260
44,866
2014
2013
89,935
(798,433)
25,977
(187,959)
128,124
157,820
1,061,011
10,081
9,668
(1,401)
(1,700)
252,716
240,407
*Depreciation and amortisation includes the depreciation component of the cost of inventory sold.
EBIT is a non-IFRS financial measure and reflects EBITDA adjusted for depreciation and amortisation and goodwill impairment
charges.
LSE:ACA
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Mining statistical information
The following describes certain line items used in the Acacia Group’s discussion of key performance indicators:
- Open pit material mined – measures in tonnes the total amount of open pit ore and waste mined.
- Underground ore tonnes hoisted – measures in tonnes the total amount of underground ore mined and hoisted.
- Total tonnes mined includes open pit material plus underground ore tonnes hoisted.
- Strip ratio – measures the ratio of waste-to-ore for open pit material mined.
- Ore milled – measures in tonnes the amount of ore material processed through the mill.
- Head grade – measures the metal content of mined ore going into a mill for processing.
- Milled recovery – measures the proportion of valuable metal physically recovered in the processing of ore. It is generally
stated as a percentage of the metal recovered compared to the total metal originally present.
LSE:ACA
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Risk Review
During the year we have made significant changes to the way that we run our business, which has resulted in a number of
changes to our principal risks profile. Whilst our principal risks continue to fall within four broad categories: strategic risks,
financial risks, external risks and operational risks, as a result of a range of cost control and revised operating and planning
initiatives implemented during the year, the following risks are no longer viewed as principal risks to the management and
operation of our business: (i) costs and capital expenditure; (ii) utilities supply; (iii) land acquisitions; and (iv) organisational
restructuring. In addition to this and again due to enhancements made to business practices throughout the year, we have
allocated a medium risk rating to the following risks, previously viewed as high-level risks in 2013:

Community relations: we have continued to enhance community relations practices this year, having seen noticeable
benefits through the investments made by the Acacia Maendeleo Fund and other community relations initiatives, in
addition to the continued successful implementation of our stakeholder engagement model and social management
plans. In addition, we continue to work on enhancements to our corporate social responsibility strategy, particularly
with a view to enhancing economic empowerment initiatives, and other measures that enhance relationships with our
local stakeholders, such that we believe we have adequate initiatives in place to manage and mitigate material risks to
such relationships.

Employee, contractor and industrial relations: we have continued to strengthen employee relations and practices
during the year, noticeably through our implementation of our new accountable management system and enhanced
practices for industrial relations management. We also successfully implemented core elements of organisational
restructuring at Bulyanhulu throughout the year and continue to advance our targets for workforce nationalisation
across the Group, such that risks relating to employees and contractors are now viewed as having a medium impact
to our business.

Reserves and resources estimates: whilst it will never be possible to give assurances or certainty as regards reserves
and resources estimates due to the varying nature and various factors which can impact such estimates, as a result of
the improvements we have introduced, and will continue to implement as regards mine planning and cost controls this
year, we believe that we have reduced certain exposures in this context, such that risks in this regard are now viewed
as having a medium impact to our business.

Taxation reviews: as noted in the financial review of the year, we have made significant progress in the management
and recoverability of Acacia’s indirect tax receivables, particularly in the context of VAT, such that whilst any
significant change to the taxation regime in Tanzania could have a material adverse effect on our financial position,
our 2014 risk rating reflects the positive progress made to achieve resolutions to existing disputes.
In conjunction with the re-assessment of certain risks, we have also looked at the impact of emerging risks to our business, and
believe it is appropriate to add the following as new principal risks, given their importance to ongoing operations:




Safety risks relating to mining operations: despite the significant health, safety and risk management systems that
Acacia has in place for its underground and surface mining operations, mining and in particular underground mining is
subject to a number of hazards and risks in the workplace, such as fall of ground relating to underlying geotechnical
risks, potential fires and mobile equipment incidents, such that safety incidents in the workplace may unfortunately
occur and did occur in 2014.
Implementation of enhanced operational systems: throughout 2014 we have made a number of enhancements to
mine planning and financial modelling practices as part of continuing reviews of existing operational systems and
models, required to support increased productivity and ongoing reductions in operating cost profiles. Given the
ongoing nature of systems reviews and the importance of this to the achievement of future business objectives, we
believe it appropriate to monitor the implementation of enhanced operational systems as a principal risk going
forward.
Equipment effectiveness: previously we have reviewed risks relating to equipment effectiveness in the context of
availability of critical processes. However, as part of ongoing reviews we have decided to separate this into a
standalone risk in order to chart equipment availability, utilisation and productivity as required to meet increasing
output levels.
Occupational health and life threatening diseases: in prior years we have viewed occupational health and disease
risks as medium, given the range of health and safety controls across our business. However, given the impact of
certain epidemics this year across the African region, notably the impact of Ebola in West Africa, we have heightened
monitoring of risks relating to occupational health and life threatening diseases this year.
Further details as regards our Principal Risks and Uncertainties will be provided as part of the 2014 Annual Report and
Accounts.
Directors
The Directors serving on the Board during the year will be listed in Acacia’s annual report. A list of current Directors is
maintained on Acacia’s website: www.acaciamining.com
LSE:ACA
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Condensed Financial Information
Consolidated income statement
For the year
ended
31 December
For the year
ended
31 December
2014
2013
930,248
929,004
Cost of sales
(688,278)
(713,806)
Gross profit
241,970
215,198
(32,685)
(33,970)
(8,388)
1,813
(18,284)
(16,927)
(Unaudited)
(in thousands of United States dollars, except per share amounts)
Notes
CONTINUING OPERATIONS
Revenue
6
7
Impairment charges
Other charges
8
Profit/(loss) before net finance expense and taxation
(10,787)
(12,237)
-
(1,044,310)
(47,921)
(30,424)
123,905
(920,857)
Finance income
9
1,324
1,670
Finance expense
9
(10,043)
(9,552)
115,186
(928,739)
(25,977)
187,959
89,209
(740,780)
726
(57,653)
89,935
(798,433)
89,209
(740,780)
1,193
(40,321)
(467)
(17,332)
11
21.8
(180.6)
11
0.3
(9.8)
Tax (expense)/credit
10
Net profit/(loss) from continuing operations
DISCONTINUED OPERATIONS
Net profit/(loss) from discontinued operations
4
Net profit/(loss) attributable to:
Owners of the parent (net earnings/(loss))
- Continuing operations
Earnings/(loss) per share:
- Basic and dilutive earnings/(loss) per share (cents) from continuing
operations
- Basic and dilutive earnings/(loss) per share (cents) from discontinued
operations
The notes on pages 33 to 47 are an integral part of this financial information.
LSE:ACA
28
Consolidated statement of comprehensive income
(Unaudited)
(in thousands of United States dollars)
For the year
ended
31 December
For the year
ended
31 December
2014
2013
89,935
(798,433)
(922)
1,570
89,013
(796,863)
89,480
(779,531)
(467)
(17,332)
Other comprehensive (expense)/income:
Items that may be subsequently reclassified to profit or loss:
Changes in fair value of cash flow hedges
Total comprehensive income/(loss) for the year
Attributed to:
- Owners of the parent
- Non-controlling interests
LSE:ACA
29
Consolidated balance sheet
(Unaudited)
ASSETS
Non-current assets
Goodwill and intangible assets
Property, plant and equipment
Deferred tax assets
Non-current portion of inventory
Derivative financial instruments
Other assets
Notes
12
13
14
Current assets
Inventories
Trade and other receivables
Other current assets
Cash and cash equivalents
15
14
15
Assets of disposal group classified as held for sale
Total assets
EQUITY AND LIABILITIES
Share capital and share premium
Other reserves
Total owners' equity
Total equity
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
Other non-current liabilities
16
13
14
17
Current liabilities
Trade and other payables
Borrowings
Provisions
Other current liabilities
16
14
17
Liabilities of disposal group classified as held for sale
Total liabilities
Total equity and liabilities
As at
31 December
2014
As at
31 December
2013
211,190
1,425,315
50,852
90,006
1,806
133,020
1,912,189
211,190
1,280,671
50,787
72,689
3,253
137,191
1,755,781
265,526
34,989
1,040
75,822
293,850
671,227
2,583,416
253,676
24,210
1,366
113,945
282,409
675,606
596
2,431,983
929,199
1,068,168
1,997,367
4,781
2,002,148
929,199
992,915
1,922,114
5,248
1,927,362
127,800
61,904
4,079
155,601
17,365
366,749
142,000
35,862
1,207
132,237
10,101
321,407
174,254
14,200
13,729
4,617
7,719
214,519
581,268
147,896
5,074
1,028
12,456
166,454
16,760
504,621
2,583,416
2,431,983
LSE:ACA
30
Consolidated statement of changes in equity
(Unaudited)
Balance at 1 January 2013
Total comprehensive income/(loss) for the
year
Dividends to equity holders of the Company
Stock option grants
Balance at 31 December 2013
Total comprehensive (loss)/income for the
year
Dividends to equity holders of the Company
Stock option grants
Balance at 31 December 2014
Notes
Cash flow
hedging
reserve
Stock
option
reserve
Retained
earnings/
(Accumulated
losses)
Total
owners'
equity
Total noncontrolling
interests
Total
equity
Share
capital
Share
premium
Contributed
surplus/Other
reserve
62,097
867,102
1,368,713
363
3,502
453,933
2,755,710
22,580
2,778,290
62,097
867,102
1,368,713
1,570
1,933
476
3,978
(781,101)
(54,541)
(381,709)
(779,531)
(54,541)
476
1,922,114
(17,332)
5,248
(796,863)
(54,541)
476
1,927,362
62,097
867,102
1,368,713
(922)
1,011
(284)
3,694
90,402
(13,943)
(305,250)
89,480
(13,943)
(284)
1,997,367
(467)
4,781
89,013
(13,943)
(284)
2,002,148
LSE:ACA
31
Consolidated statement of cash flows
For the year
ended
31 December
2014
For the year
ended
31 December
2013
89,935
(798,433)
25,977
124,113
8,680
(4,332)
20,150
28,988
293,511
1,401
(5,384)
289,528
(187,959)
141,159
7,968
1,061,011
(175)
(41,165)
8,181
190,587
1,700
(5,172)
187,115
(246,682)
1,388
(11,633)
(65)
(256,992)
(373,101)
(8,289)
(588)
(4,872)
(386,850)
Cash flows from financing activities
Loans received
Dividends paid
Finance lease instalments
Net cash (used in)/generated by financing activities
(13,943)
(5,073)
(19,016)
142,000
(54,541)
(5,137)
82,322
Net increase/(decrease) in cash and cash equivalents
Net foreign exchange difference
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
13,520
(2,079)
282,409
293,850
(117,413)
(1,526)
401,348
282,409
(Unaudited)
Cash flows from operating activities
Adjustments for:
Tax expense/(credit)
Depreciation and amortisation
Finance items
Impairment charges
Profit on disposal of property, plant and equipment
Working capital adjustments
Other non-cash items
Cash generated from operations before interest and tax
Finance income
Finance expenses
Income tax paid
Net cash generated by operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Investments in other assets
Cash flow related to the sale of Tulawaka
Acquisition of subsidiary, net of cash acquired
Other investing activities
Net cash used in investing activities
.
LSE:ACA
32
Notes to the condensed financial information
1. General Information
Acacia Mining plc, formerly African Barrick Gold plc (the “Company”, "Acacia” or collectively with its subsidiaries the “Group”) was
incorporated on 12 January 2010 and re-registered as a public limited company on 12 March 2010 under the Companies Act
2006. It is registered in England and Wales with registered number 7123187.
On 24 March 2010 the Company’s shares were admitted to the Official List of the United Kingdom Listing Authority (“UKLA”) and
to trading on the Main Market of the London Stock Exchange, hereafter referred to as the Initial Public Offering (“IPO”). The
address of its registered office is No.1 Cavendish Place, London, W1G 0QF.
Barrick Gold Corporation (“Barrick”) currently owns approximately 63.9% of the shares of the Company and is the ultimate parent
and controlling party of the Group. The financial statements of Barrick can be obtained from www.barrick.com.
The condensed consolidated financial information for the year ended 31 December 2014 was approved for issue by the Board of
Directors of the Company on 13 February 2015. The condensed consolidated financial information does not comprise statutory
accounts within the meaning of section 434 of the Companies Act 2006. The condensed consolidated financial information is
unaudited.
The Group’s primary business is the mining, processing and sale of gold. The Group has three operating mines located in
Tanzania. The Group also has a portfolio of exploration projects located across Africa.
2.
Basis of Preparation of the condensed financial information
The financial information set out above does not constitute the Group’s statutory accounts for the year ended 31 December 2014,
but is derived from the Group’s full financial accounts, which are in the process of being audited. The Group’s full financial
accounts will be prepared under International Financial Reporting Standards as adopted by the European Union. The financial
statements are prepared on a going concern basis.
The condensed consolidated financial information has been prepared under the historical cost convention basis, as modified by
the revaluation of financial assets and financial liabilities (including derivative instruments) at fair value through profit and loss. The
financial statements are presented in US dollars (US$) and all monetary results are rounded to the nearest thousand dollars (US)
except when otherwise indicated.
Where a change in the presentational format between the prior year and current year condensed consolidated financial information
has been made during the period, comparative figures have been restated accordingly. No presentational changes were made in
the current year.
3.
Accounting Policies
Accounting policies have remained consistent with the prior year except for the adoption of new standards.
a)
New and amended standards adopted by the Group
The following new standards and amendments to standards are applicable and were adopted by the Group for the first time for the
financial year beginning 1 January 2014:





Amendment to IAS 32, ‘Financial instruments: Presentation’ on offsetting financial assets and financial liabilities. This
amendment clarifies that the right of set-off must not be contingent on a future event. It must also be legally enforceable for all
counterparties in the normal course of business, as well as in the event of default, insolvency or bankruptcy. The amendment
also considers settlement mechanisms. The amendment did not have a significant effect on the group financial statements.
Amendments to IAS 36, ‘Impairment of assets’, on the recoverable amount disclosures for non-financial assets. This
amendment removed certain disclosures of the recoverable amount of CGUs which had been included in IAS 36 by the issue
of IFRS 13.
Amendment to IAS 39, ‘Financial instruments: Recognition and measurement’ on the novation of derivatives and the
continuation of hedge accounting. This amendment considers legislative changes to ‘over-the-counter’ derivatives and the
establishment of central counterparties. Under IAS 39 novation of derivatives to central counterparties would result in
discontinuance of hedge accounting. The amendment provides relief from discontinuing hedge accounting when novation of a
hedging instrument meets specified criteria. The group has applied the amendment and there has been no significant impact
on the group financial statements as a result.
IFRIC 21, ‘Levies’, sets out the accounting for an obligation to pay a levy if that liability is within the scope of IAS 37
‘Provisions’. The interpretation addresses what the obligating event is that gives rise to pay a levy and when a liability should
be recognised. The Group is not currently subjected to significant levies so the impact on the Group is not material.
IFRS 10, ‘Consolidated financial statements’ builds on existing principles by identifying the concept of control as the
determining factor in whether an entity should be included within the consolidated financial statements of the parent company.
The standard provides additional guidance to assist in the determination of control where this is difficult to assess. The
amendment did not have a significant effect on the assessment of control.
LSE:ACA
33


b)
IFRS 11, ‘Joint arrangements’ focuses on rights and obligations of the parties to the arrangement rather than its legal form.
Proportional consolidation of joint arrangements is no longer permitted. The amendment did not have a significant effect on the
group financial statements.
IFRS 12, ‘Disclosures of interests in other entities’ includes the disclosure requirements for all forms of interests in other
entities including joint arrangements, associates, structured entities and other off-balance sheet vehicles. The amendment did
not have a significant effect on the group financial statements.
New and amended standards, and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1
January 2014, and have not been applied in preparing these condensed consolidated financial statements.


4.
IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial
liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the
classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and
establishes three primary measurement categories for financial assets: amortised cost, fair value through OCI and fair value
through P&L. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics
of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the
irrevocable option at inception to present changes in fair value in OCI not recycling. There is now a new expected credit losses
model that replaces the incurred loss impairment model used in IAS 39. For financial liabilities there were no changes to
classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for
liabilities designated at fair value through profit or loss. IFRS 9 relaxes the requirements for hedge effectiveness by replacing
the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument
and for the ‘hedged ratio’ to be the same as the one management actually use for risk management purposes.
Contemporaneous documentation is still required but is different to that currently prepared under IAS 39. The standard is
effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted subject to EU endorsement.
The group is yet to assess IFRS 9’s full impact.
IFRS 15, ‘Revenue from contracts with customers’ deals with revenue recognition and establishes principles for reporting
useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows
arising from an entity’s contracts with customers. Revenue is recognised when a customer obtains control of a good or service
and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18
‘Revenue’ and IAS 11 ‘Construction contracts’ and related interpretations. The standard is effective for annual periods
beginning on or after 1 January 2017 and earlier application is permitted. The standard is not expected to have a significant
impact on the Group.
Discontinued Operations and disposal group assets and liabilities held for sale
On 15 November 2013, Acacia announced that an agreement was reached with STAMICO, the Tanzanian State Mining
Corporation, whereby STAMICO would acquire the Tulawaka Gold Mine (“Tulawaka”) and certain exploration licences
surrounding Tulawaka for consideration of US$4.5 million and the grant of a 2% net smelter royalty on future production in excess
of 500,000 ounces, capped at US$500,000.
On 4 February 2014, Acacia announced the completion of the sale. STAMICO has taken ownership and management of the
rehabilitation fund established as part of the closure plan for the mine, in return for the assumption of all remaining past and future
closure and rehabilitation liabilities for Tulawaka, and has indemnified the other parties to the agreement in relation to these
liabilities. The transfer was completed with a net cash payment of US$11.6 million by Acacia to STAMICO for the balance of the
rehabilitation fund, less the transaction consideration. This resulted in a gain of US$4.1 million.
The financial results of Tulawaka have been presented as discontinued operations in the consolidated financial statements. The
comparative results in the consolidated income statement have been presented as if Tulawaka had been discontinued from the
start of the comparative period.
LSE:ACA
34
Below is a summary of the results of Tulawaka for the year ended 31 December:
Results of discontinued operations
Revenue
Cost of sales
Gross loss
1
Impairment charges
2
Other charges
Loss before net finance expense and taxation
Finance income
Finance expense
Loss before taxation
Tax credit
Net loss for the year
1
2
2014
2013
(118)
805
687
77
(38)
726
726
13,514
(30,368)
(16,854)
(1,311)
(3,259)
(16,701)
(19,442)
(57,567)
30
(116)
(57,653)
(57,653)
2014
6,300
(11,612)
(5,312)
2013
(31,811)
(8,702)
(40,513)
Corporate social responsibility expenses relate to projects supported from the Acacia Maendeleo Fund.
Included in other charges are non-operational costs incurred since the cessation of operations of US$1.9 million.
Below is a summary of the cash flows from discontinued operations for the year ended 31 December:
Operating cash flows
Investing cash flows
Financing cash flows
Total cash flows
Below is a summary of Tulawaka’s assets and liabilities at 31 December classified as disposal group held for sale:
2014
-
Inventories
Disposal group assets held for sale
Provisions
Disposal group liabilities held for sale
Net assets and liabilities of disposal group held for sale
5.
2013
239
357
596
16,760
16,760
(16,164)
Segment Reporting
The Group has only one primary product produced in a single geographic location, being gold produced in Tanzania. In addition
the Group produces copper and silver as a co-product. Reportable operating segments are based on the internal reports provided
to the Chief Operating Decision Maker (“CODM”) to evaluate segment performance, decide how to allocate resources and make
other operating decisions. After applying the aggregation criteria and quantitative thresholds contained in IFRS 8, the Group’s
reportable operating segments were determined to be: North Mara gold mine; Bulyanhulu gold mine; Buzwagi gold mine; a
separate Corporate and Exploration segment, which primarily consists of costs related to other charges and corporate social
responsibility expenses, as well as discontinued operations (Tulawaka gold mine).
Segment results and carrying values include items directly attributable to the segment as well as those that can be allocated on a
reasonable basis. Segment carrying values are disclosed and calculated as shareholders equity after adding back debt and
intercompany liabilities, and subtracting cash and intercompany assets. Capital expenditures comprise of additions to property,
plant and equipment. The Group has also included segment cash costs and all-in sustaining cost per ounce sold.
Segment information for the reportable operating segments of the Group for the periods ended 31 December 2014 and 31
December 2013 is set out below.
LSE:ACA
35
For the year ended 31 December 2014
Gold revenue
Co-product revenue
Total segment revenue
Segment cash operating cost1
Corporate administration and
exploration
Other charges and corporate social
responsibility expenses
EBITDA2
Depreciation and amortisation7
EBIT2
Finance income
Finance expense
Profit before taxation
Tax expense
Net profit for the year
Capital expenditure:
Sustaining
Expansionary
Non-cash capital expenditure
adjustments
Reclamation asset addition/(reduction)
Other non-cash capital expenditure
Total capital expenditure8
Segmental cash operating cost
Deduct: co-product revenue
Total cash costs
Sold ounces3
Attributable cash cost per ounce
sold2
Total cash costs2
Corporate administration charges
Rehabilitation - accretion and
depreciation
Mine site exploration costs
Capitalised stripping/ UG development
Sustaining capital expenditure
All-in sustaining cost per ounce sold2
Segment carrying value5
North
Mara
346,790
546
347,336
(171,535)
Bulyanhulu
269,390
17,287
286,677
(192,363)
Buzwagi
268,815
27,420
296,235
(196,256)
Other
-
Continuing
operations
884,995
45,253
930,248
(560,154)
Discontinued
operations6
-
Total
884,995
45,253
930,248
(560,154)
(10,967)
(11,570)
(8,533)
(28,287)
(59,357)
-
(59,357)
(8,519)
156,315
(74,893)
81,422
257
(2,389)
75,640
(23,043)
52,597
(13,811)
68,933
(38,444)
30,489
164
(2,721)
27,932
(7,345)
20,588
(11,188)
80,258
(11,763)
68,495
403
(2,398)
66,501
(20,175)
46,326
(25,190)
(53,477)
(3,024)
(56,501)
500
(2,535)
(58,537)
1,408
(57,128)
(58,708)
252,029
(128,124)
123,905
1,324
(10,043)
115,186
(25,977)
89,209
687
687
687
77
(38)
726
726
(58,021)
252,716
(128,124)
124,592
1,401
(10,081)
115,912
(25,977)
89,935
18,049
13,126
40,900
72,075
23,388
48,010
60,151
131,549
12,817
31,357
44,174
6,004
6,004
60,258
61,136
132,408
253,802
-
60,258
61,136
132,408
253,802
16,003
88,078
6,141
137,690
(1,131)
43,043
(5,876)
128
21,013
(5,876)
268,939
-
21,013
(5,876)
268,939
171,535
(546)
170,989
274,540
192,363
(17,287)
175,076
215,740
196,256
(27,420)
168,836
213,399
-
560,154
(45,253)
514,901
703,680
-
560,154
(45,253)
514,901
703,680
623
812
791
732
732
623
38
812
52
791
39
732
58
732
58
18
2
18
149
99
947
7
2
7
279
107
1,266
5
1
12
147
60
1,055
11
1
15
188
100
1,105
11
1
15
188
100
1,105
326,760
1,212,004
261,993
LSE:ACA
70,547
1,871,304
-
1,871,304
36
Gold revenue
Co-product revenue
Total segment revenue
Segment cash operating cost1
Corporate administration and exploration
North
Mara
364,574
819
365,393
(172,894)
(13,026)
Bulyanhulu
262,539
16,882
279,421
(190,647)
(14,661)
Buzwagi
258,879
25,311
284,190
(202,286)
(20,976)
Other
(421)
Continuing
operations
885,992
43,012
929,004
(565,827)
(49,084)
Discontinued
operations6
13,483
31
13,514
(20,527)
(1,311)
Total
899,475
43,043
942,518
(586,354)
(50,395)
Other charges and corporate social
responsibility expenses
EBITDA2
Impairment charges
Depreciation and amortisation7
EBIT2
Finance income
Finance expense
Loss before taxation
Tax credit
Net loss for the year
(11,961)
167,512
(307,259)
(68,565)
(208,312)
327
(2,501)
(210,486)
44,283
(166,203)
(5,827)
68,286
(35,867)
32,419
662
(1,482)
31,599
(13,977)
17,622
(4,730)
56,198
(690,478)
(39,906)
(674,186)
406
(2,446)
(676,226)
146,990
(529,236)
(20,143)
(20,564)
(46,573)
(3,641)
(70,778)
275
(3,123)
(73,626)
10,663
(62,963)
(42,661)
271,432
(1,044,310)
(147,979)
(920,857)
1,670
(9,552)
(928,739)
187,959
(740,780)
(22,701)
(31,025)
(16,701)
(9,841)
(57,567)
30
(116)
(57,653)
(57,653)
(65,362)
240,407
(1,061,011)
(157,820)
(978,424)
1,700
(9,668)
(986,392)
187,959
(798,433)
38,386
949
65,594
104,929
25,193
114,912
45,428
185,533
31,589
60,136
91,725
690
1,608
2,298
95,858
117,469
171,158
384,485
583
583
96,441
117,469
171,158
385,068
(11,271)
93,658
(10,044)
175,489
(9,230)
82,495
2,298
(30,545)
353,940
(195)
388
(30,740)
354,328
Segmental cash operating cost
Deduct: co-product revenue
Total cash costs
Sold ounces3
Cash cost per ounce sold2
Attributable to outside interests4
Total attributable cash cost per ounce
sold2
172,894
(819)
172,075
260,945
659
190,647
(16,882)
173,765
195,304
890
202,286
(25,311)
176,975
187,348
945
-
565,827
(43,012)
522,815
643,597
812
20,527
(31)
20,496
8,778
2,335
586,354
(43,043)
543,311
652,375
833
(6)
Cash costs per ounce sold2
Corporate administration charges
Rehabilitation - accretion and
depreciation
Mine site exploration costs
Capitalised stripping/ UG development
Sustaining capital expenditure
Attributable to outside interests4
All-in sustaining cost per ounce sold2
659
38
890
72
945
51
812
50
2,335
149
833
51
29
12
31
251
207
7
3
6
233
133
15
2
4
321
168
18
6
19
266
175
86
6
371
66
1,227
1,344
1,506
1,346
3,013
19
6
24
262
173
(6)
1,362
367,326
1,116,142
253,344
1,817,817
10,489
1,828,306
Capital expenditure:
Sustaining
Expansionary
Non-cash capital expenditure
adjustments
Reclamation asset addition/(reduction)
Segment carrying value5
827
81,005
1 The CODM reviews cash operating costs for the three operating mine sites separately from corporate administration costs and exploration costs. Consequently, the Group has reported these costs
in this manner.
2 These are non-IFRS financial performance measures with no standard meaning under IFRS. Refer to ‘Non IFRS measures’ on page 25 for definitions.
3 Reflects 100% of ounces sold.
4 Reflects the adjustment for non-controlling interest at Tulawaka.
5
Segment carrying values are calculated as shareholders equity after adding back debt and intercompany liabilities, and subtracting cash and intercompany assets and include outside
shareholders’ interests.
6
Represents Tulawaka, which has been discontinued.
7
Depreciation and amortisation includes the depreciation component of the cost of inventory sold.
8
Capital expenditure for the segment note and all-in sustaining cost calculations excludes foreign exchange movements on property, plant and equipment balances which are included in note 12
Property, plant and equipment.
LSE:ACA
37
6.
Revenue
Gold doré sales
Gold concentrate sales¹
Copper concentrate sales¹
Silver sales
Total
For the year
ended 31
December
2014
For the year
ended 31
December
2013
602,173
282,822
40,507
4,746
930,248
659,760
226,231
37,539
5,474
929,004
1 Concentrate sales includes negative provisional price adjustments to the accounts receivable balance due to changes in market gold, silver and copper prices prior to final
settlement as follows: US$5.4 million for the year ended 31 December 2014 (US$12.2 million for the year ended 31 December 2013).
Revenue by Location of Customer
Europe
Switzerland
Germany
Asia
India
China
Japan
Total revenue
2
2
For the year
ended 31
December
2014
For the year
ended 31
December
2013
104,981
257,914
73,126
603,807
134,844
86,616
930,248
403,956
117,099
76,909
929,004
Revenue by location of customer is determined based on the country to which the gold is delivered.
Included in revenues for the year ended 31 December 2014 are sales to seven major customers. Revenues of approximately
US$625 million (2013: US$681 million) arose from sales to four of the Group’s largest customers.
7.
Exploration and Evaluation costs
The following represents a summary of exploration and evaluation expenditures incurred at each mine site and significant
exploration targets (if applicable).
Expensed during the year:
North Mara
Buzwagi
Bulyanhulu
Kenya
1
Other
Total expensed
Capitalised during the year:
North Mara
Bulyanhulu
Nyanzaga
Total capitalised
Total
For the year
ended 31
December
2014
For the year
ended 31
December
2013
478
148
7,595
5,554
4,509
18,284
3,099
366
656
4,407
8,399
16,927
1,957
204
2,161
20,445
410
1,945
1,608
3,963
20,890
1 - Included in “other” are the exploration activities conducted through Acacia Exploration Africa Limited and in West Africa for the South Houndé Project. All primary greenfield exploration and
evaluation activities are conducted in these companies.
LSE:ACA
38
8.
Other Charges
For the year
ended
31 December
2014
For the year
ended
31 December
2013
13,689
13,621
13,516
326
710
6,710
1,626
1,196
89
86
51,569
13,305
1,375
7,203
1,369
1,463
3,138
3,246
2,387
3,617
37,103
Other income
Discounting of indirect tax receivables
Profit on disposal of property, plant and equipment
Foreign exchange gains
Insurance theft claim
Total
(3,648)
(3,648)
(99)
(3,622)
(2,958)
(6,679)
Total other charges
47,921
30,424
For the year
ended
31 December
2014
868
456
1,324
For the year
ended
31 December
2013
937
733
1,670
For the year
ended
31 December
2014
4,697
2,447
3,925
439
606
862
12,976
(2,933)
10,043
For the year
ended
31 December
2013
4,468
3,050
2,413
658
756
620
11,965
(2,413)
9,552
Other expenses
Operational Review costs (including restructuring cost)
Discounting of indirect tax receivables
Unrealised non-hedge derivative losses
Foreign exchange losses
Bad debt expense
Disallowed indirect taxes
Legal costs
CNG related costs (residual)
Government levies and charges
Project development costs
Loss on disposal of property, plant and equipment
Other
Total
9.
Finance Income and Expenses
a)
Finance income
Interest on time deposits
Other
Total
b)
Finance expense
1
Unwinding of discount
2
Revolving credit facility charges
Interest on CIL facility
Interest on finance leases
Bank charges
Other
Capitalised during the year
Total
1
The unwinding of discount is calculated on the environmental rehabilitation provision.
2
Included in credit facility charges are the amortisation of the fees related to the revolving credit facility as well as the monthly interest and facility fees.
LSE:ACA
39
10. Tax Expense/(Credit)
Current tax:
Current tax on profits for the year
Adjustments in respect of prior years
Total current tax
Deferred tax:
Origination and reversal of temporary differences
Total deferred tax
Income tax expense/(credit)
For the year
ended
31 December
2014
For the year
ended
31 December
2013
-
40
40
25,977
25,977
25,977
(187,999)
(187,999)
(187,959)
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate
applicable to the profits of the consolidated entities as follows:
Profit/(loss) before tax
Tax calculated at domestic tax rates applicable to profits in the respective countries
Tax effects of:
Expenses not deductible for tax purposes
Utilisation of previously unrecognised tax losses
Tax losses for which no deferred income tax asset was recognised
Prior year adjustments
Tax charge/(credit)
For the year
ended 31
December
2014
115,186
For the year
ended 31
December
2013
(928,739)
41,544
(291,546)
438
(21,140)
8,039
(2,904)
25,977
13,111
84,904
5,572
(187,959)
Tax periods remain open to review by the Tanzanian Revenue Authority (TRA) in respect of income taxes for five years following
the date of the filing of the corporate tax return, during which time the authorities have the right to raise additional tax assessments
including penalties and interest. Under certain circumstances the reviews may cover longer periods. Because a number of tax
periods remain open to review by tax authorities, there is a risk that transactions that have not been challenged in the past by the
authorities may be challenged by them in the future, and this may result in the raising of additional tax assessments plus pe nalties
and interest.
LSE:ACA
40
11. Earnings/(loss) Per Share (EPS)
Basic EPS is calculated by dividing the net profit for the year attributable to owners of the Company by the weighted average
number of Ordinary Shares in issue during the year.
Diluted earnings per share is calculated by adjusting the weighted average number of Ordinary Shares outstanding to assume
conversion of all dilutive potential Ordinary Shares. The Company has dilutive potential Ordinary Shares in the form of stock
options. The weighted average number of shares is adjusted for the number of shares granted assuming the exercise of stock
options.
At 31 December 2014 and 31 December 2013, earnings per share have been calculated as follows:
For the year
ended
31 December
2014
For the year
ended
31 December
2013
89,209
1,193
(740,780)
(40,321)
Weighted average number of Ordinary Shares in issue
Adjusted for dilutive effect of stock options
410,085,499
218,126
410,085,499
-
Weighted average number of Ordinary Shares for diluted earnings per share
410,303,625
410,085,499
21.8
0.3
22.1
(180.6)
(9.8)
(190.4)
(in thousands of United States dollars except per share amounts)
Earnings/(loss)
Net profit/(loss) from continuing operations attributable to owners of the parent
Net profit/(loss) from discontinued operations attributable to owners of the parent
Earnings/(loss) per share
Basic and dilutive earnings/(loss) per share from continuing operations (cents)
Basic and dilutive earnings/(loss) per share from discontinued operations (cents)
Group basic and dilutive earnings/ (loss) per share
12. Property, Plant and Equipment
At 1 January 2014, net of accumulated depreciation
Additions
Disposals/write-downs
Depreciation
Transfers between categories
At 31 December 2014
Plant and
equipment
392,644
(182)
(55,411)
233,518
570,569
Mineral
properties and
mine
development
costs
651,763
(68,702)
127,751
710,812
Assets under
construction¹
236,264
268,939
(361,269)
143,934
Total
1,280,671
268,939
(182)
(124,113)
1,425,315
At 1 January 2014
Cost
Accumulated depreciation
Net carrying amount
1,518,500
(1,125,856)
392,644
1,383,693
(731,930)
651,763
236,264
236,264
3,138,457
(1,857,786)
1,280,671
At 31 December 2014
Cost
Accumulated depreciation and impairment
Net carrying amount
1,750,743
(1,180,174)
570,569
1,511,444
(800,632)
710,812
143,934
143,934
3,406,121
(1,980,806)
1,425,315
LSE:ACA
41
At 1 January 2013, net of accumulated depreciation
Additions
Disposals/write-downs
2,3
Impairments
Depreciation
3
Transfers between categories
Reclassification to disposal group assets held for
sale
3
At 31 December 2013
At 1 January 2013
Cost
Accumulated depreciation
Net carrying amount
At 31 December 2013
3
Cost
3
Net carrying amount
Plant and
equipment
945,118
(477)
(607,368)
(84,350)
139,721
Mineral
properties and
mine
development
costs
819,063
(299,454)
(56,809)
189,202
Assets under
construction¹
210,859
354,328
(328,923)
Total
1,975,040
354,328
(477)
(906,822)
(141,159)
-
392,644
(239)
651,763
236,264
(239)
1,280,671
1,475,374
(530,256)
945,118
1,250,088
(431,025)
819,063
210,859
210,859
2,936,321
(961,281)
1,975,040
1,518,500
(1,125,856)
392,644
1,383,693
(731,930)
651,763
236,264
236,264
3,138,457
(1,857,786)
1,280,671
1 Assets under construction represents (a) sustaining capital expenditures incurred constructing property, plant and equipment related to operating mines and advance deposits made towards the
purchase of property, plant and equipment; and (b) expansionary expenditure allocated to a project on a business combination or asset acquisition, and the subsequent costs incurred to develop
the mine. Once these assets are ready for their intended use, the balance is transferred to plant and equipment and/or mineral properties and mine development costs.
2 The impairment in 2013 relates to long lived assets at Buzwagi, North Mara and Tulawaka.
3 2013 carrying values have been restated to correct the allocation of movements between asset categories. This has not resulted in a change in the total carrying value.
Leases
Property, plant and equipment includes assets relating to the design and construction costs of power transmission lines and
related infrastructure. At completion, ownership was transferred to TANESCO in exchange for amortised repayment in the form of
reduced electricity supply charges. No future lease payment obligations are payable under these finance leases.
Property, plant and equipment also includes emergency back-up and spinning power generators leased at the Buzwagi mine
under a three-year lease agreement, with an option to purchase the equipment at the end of the lease term. These leases have
been classified as finance leases.
Property, plant and equipment also includes five drill rigs purchased under short-term finance leases.
The following amounts were included in property, plant and equipment where the Group is a lessee under a finance lease:
As at
31 December
2014
70,764
(53,246)
17,518
Cost - capitalised finance leases
Net carrying amount
LSE:ACA
As at
31 December
2013
70,764
(50,091)
20,673
42
13. Deferred Tax Assets and Liabilities
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
As at
31 December
2014
397,153
397,153
Tax losses
Total
As at
31 December
2013
418,263
418,263
The above tax losses, which translate into deferred tax assets of approximately US$111 million (2013: US$126 million), have not
been recognised in respect of these items due to uncertainties regarding availability of tax losses, or there being uncertainty
regarding future taxable income against which these assets can be utilised.
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Balance sheet classifications
Balance sheet classification
Provisions
Interest deferrals
Tusker acquisition
Kenya acquisition
Tax loss carry-forwards
Net deferred tax (assets)/liabilities
Assets
2014
(10,663)
(23,129)
(322,116)
(355,908)
2013
(11,756)
(22,960)
(289,821)
(324,537)
Liabilities
2014
2013
357,071
341
6,668
2,880
366,960
297,421
286
7,340
4,565
309,612
Net
2014
357,071
(10,663)
(22,788)
6,668
2,880
(322,116)
11,052
2013
297,421
(11,756)
(22,674)
7,340
4,565
(289,821)
(14,925)
Legal entities
Legal entities
North Mara Gold Mine Ltd
Bulyanhulu Gold Mine Ltd
Pangea Minerals Ltd
Other
Net deferred tax (assets)/liabilities
2014
Assets
2013
(48,066)
(2,786)
(50,852)
(48,066)
(2,721)
(50,787)
Liabilities
2014
2013
30,897
21,323
9,684
61,904
10,098
13,594
12,170
35,862
Net
2014
2013
30,897
21,323
(48,066)
6,898
11,052
10,098
13,594
(48,066)
9,449
(14,925)
Uncertainties regarding availability of tax losses in respect of enquiries raised and additional tax assessments issued by the TRA,
have been measured using the single best estimate of likely outcome approach resulting in the recognition of substantially all the
related deferred tax assets and liabilities. Alternative acceptable measurement policies (e.g. on a weighted average expected
outcome basis) could result in a change to deferred tax assets and liabilities being recognised, and the deferred tax charge in the
income statement.
No deferred tax has been recognised in respect of temporary differences associated with investments in subsidiaries where the
Group is in a position to control the timing of the reversal of the temporary differences, and it is probable that such differences will
not reverse in the foreseeable future. The aggregate amount of temporary differences associated with such investments in
subsidiaries is represented by the contribution of those investments to the Group’s retained earnings and amounted to US$325
million (2013: US$327 million).
LSE:ACA
43
14. Derivative financial instruments
The table below analyses financial instruments carried at fair value, by valuation method. The Group has derivative financial
instruments in the form of economic and cash flow hedging contracts which are all defined as level two instruments as they are
valued using inputs other than quoted prices that are observable for the assets or liabilities. The following tables present the
group’s assets and liabilities that are measured at fair value at 31 December 2014 and 31 December 2013.
Assets
Interest contracts: Designated as cash flow hedges
Currency contracts: Not designated as hedges
Commodity contracts: Not designated as hedges
Total
Liabilities
Current
Non-current
Current
Non-current
Net fair
value
1,040
1,040
1,806
1,806
1,054
819
11,856
13,729
4,079
4,079
752
(819)
(14,895)
(14,962)
Assets
Currency contracts: Designated as cash flow
hedges
Interest contracts: Designated as cash flow hedges
Currency contracts: Not designated as hedges
Commodity contracts: Not designated as hedges
Total
Liabilities
Current
Non-current
Current
Non-current
Net fair
value
158
1,208
1,366
3,191
3
59
3,253
1,168
3,666
240
5,074
353
449
387
18
1,207
(353)
1,574
(3,892)
1,009
(1,662)
15. Trade Receivables and other Current Assets
Trade and other receivables:
Amounts due from doré and concentrate sales
Other receivables¹
Due from related parties
Less: Provision for doubtful debt on other receivables
Total trade receivables
As at
31 December
2014
As at
31 December
2013
26,202
10,270
38
(1,521)
16,204
10,102
37
(2,133)
34,989
24,210
1 Other receivables relates to employee and supplier backcharge-related receivables and refundable deposits.
Trade receivables other than concentrate receivables are non-interest bearing and are generally on 30-90 day terms. Concentrate
receivables are generally on 60-120 day terms depending on the terms per contract. Trade receivables are amounts due from
customers in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets; if
not, they are presented as non-current assets. The carrying value of trade receivables recorded in the financial statements
represents the maximum exposure to credit risk. The Group does not hold any collateral as security.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less any provisions for impairment. A provision for impairment of trade receivables is established when there is objective
evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.
LSE:ACA
44
As at
31 December
2014
108,143
29,926
138,069
(62,247)
75,822
2
Indirect taxes receivable
Other receivables and advance payments³
Less: Indirect taxes receivable classified as non-current
Other current assets
As at
31 December
2013
159,824
18,912
178,736
(64,791)
113,945
2 To reflect the time value of money the long-term portion of this receivable has been discounted at a rate of 5% (2013: 5%).
3 Other receivables and advance payments relate to prepayments for insurance and income taxes offset against outstanding refunds for VAT and fuel levies and current amounts receivable from
the NSSF of US$5.5 million (2013: US$7.0 million).
16. Borrowings
During 2013, a US$142 million facility was put in place to fund the bulk of the costs of the construction of one of Acacia’s key
growth projects, the Bulyanhulu CIL Expansion project (“Project”). The Facility is collateralised by the Project, has a term of seven
years with a spread over Libor of 250 basis points. The interest rate has been fixed at 3.6% through the use of an interest rate
swap. The 7 year Facility is repayable in equal bi-annual instalments over the term of the Facility, after a two year repayments
holiday period. The first principal payment is due in H2 2015. The full facility of US$142 million was drawn at the end of 2013.
Interest accrued to the value of US$0.7 million was included in accounts payable at year end. Interest incurred on the borrowings
as well as hedging losses on the interest rate swap were capitalised as an asset until the CIL plant was commissioned at the
beginning of Q4 and have since been expensed. An amount of US$1.0 million has been expensed.
17. Provisions
At 1 January
Change in estimate
Utilised during the year
Unwinding of discount
Additions during the year
Reclassification to disposal group liabilities held for
sale
At 31 December
Current portion
Non-current portion
Rehabilitation¹
2014
2013
131,701
180,548
21,013
(30,740)
(399)
(5,843)
4,697
4,496
157,012
(1,411)
155,601
(16,760)
131,701
131,701
2014
1,564
(86)
(531)
2,259
Other²
2013
1,040
524
-
2014
133,265
20,927
(930)
4,697
2,259
Total
2013
181,588
(30,216)
(5,843)
4,496
-
3,206
(3,206)
-
1,564
(1,028)
536
160,218
(4,617)
155,601
(16,760)
133,265
(1,028)
132,237
1 Rehabilitation provisions relate to the decommissioning costs expected to be incurred for the operating mines. This expenditure arises at different times over the LOM for the different mine sites
and is expected to be utilised in terms of cash outflows between years 2015 and 2050 and beyond, varying from mine site to mine site.
2 Other provisions relate to provisions for legal and tax-related liabilities where the outcome is not yet certain but it is expected that it will lead to a probable outflow of economic benefits in future.
Rehabilitation obligations arise from the acquisition, development, construction and normal operation of mining property, plant and
equipment, due to government controls and regulations that protect the environment on the closure and reclamation of mining
properties. The major parts of the carrying amount of the obligation relate to tailings and waste rock dumps closure/rehabilitation
and surface contouring; demolition of buildings/mine facilities; ongoing water treatment; and ongoing care and maintenance of
closed mines. The fair values of rehabilitation provisions are measured by discounting the expected cash flows using a discount
factor that reflects the credit-adjusted risk-free rate of interest. Acacia prepares estimates of the timing and amount of expected
cash flows when an obligation is incurred and updates expected cash flows to reflect changes in facts and circumstances. The
principal factors that can cause expected cash flows to change are: the construction of new processing facilities; changes in the
quantities of material in reserves and a corresponding change in the LOM plan; changing ore characteristics that impact required
environmental protection measures and related costs; changes in water quality that impact the extent of water treatment required;
and changes in laws and regulations governing the protection of the environment.
Each year Acacia assesses cost estimates and other assumptions used in the valuation of the rehabilitation provision at each
mineral property to reflect events, changes in circumstances and new information available. Changes in these cost estimates and
assumptions are recorded as an adjustment to the carrying amount of the corresponding asset. Rehabilitation provisions are
adjusted to reflect the passage of time (accretion) calculated by applying the discount factor implicit in the initial fair-value
measurement to the beginning-of-period carrying amount of the provision. Settlement gains/losses will be recorded in other
(income) expense.
Other environmental remediation costs that are not rehabilitation provisions are expensed as incurred.
LSE:ACA
45
18. Commitments and Contingencies
The Group is subject to various laws and regulations which, if not observed, could give rise to penalties. As at 31 December 2014,
the Group has the following commitments and/ or contingencies
a)
Legal contingencies
As at 31 December 2014, the Group was a defendant in approximately 289 lawsuits. The plaintiffs are claiming damages and
interest thereon for the loss caused by the Group due to one or more of the following: unlawful eviction, termination of services,
wrongful termination of contracts of service, non-payment for services, defamation, negligence by act or omission in failing to
provide a safe working environment, unpaid overtime and public holiday compensation.
The total amounts claimed from lawsuits in which specific monetary damages are sought amounted to US$184.7 million. The
Group’s Legal Counsel is defending the Group’s current position, and the outcome of the lawsuits cannot presently be determined.
However, in the opinion of the Directors and Group’s Legal Counsel, no material liabilities are expected to materialise from these
lawsuits that have not already been provided for.
Included in the total amounts claimed is an appeal by the TRA intended for a tax assessment of US$21.3 million in respect of the
acquisition of Tusker Gold Limited. The case was awarded in favour of Acacia however the TRA has served a notice of appeal.
The calculated tax assessment is based on the sales price of the Nyanzaga property of US$71 million multiplied by the tax rate of
30%. Management is of the opinion that the assessment is invalid due to the fact that the acquisition was for Tusker Gold Limited,
a company incorporated in Australia. The shareholding of the Tanzanian related entities did not change and the Tusker Gold
Limited group structure remains the same as prior to the acquisition.
Also included in the total amounts claimed are TRA claims to the value of US$41.3 million for withholding tax on historic offshore
dividend payments paid by Acacia Mining plc to its shareholders. In addition to the claim, there are six other withholding tax claims
which have not been quantified. These claims are made on the basis that Acacia is resident in Tanzania for tax purposes.
Management are of the opinion that the claims do not have substance and that it will be successfully defended.
In 2013, a number of Tanzanian claimants represented by Leigh Day initiated proceedings against African Barrick Gold plc (now
Acacia Mining plc) and its subsidiary, North Mara Gold Mine Limited (“NMGML”), in the English Courts in relation to injuries and
fatalities at the North Mara mine. The claims were denied by Acacia Mining and NMGML and the litigation and further claims have
been settled out of court.
NMGML and Diamond Motors Ltd (DML) have entered into arbitration over the interpretation of drilling contracts entered into by
the parties, relating to periodic rate review and other provisions of the contracts. The claim by DML against NMGML is quantified
as US$17.2 million, together with interest and unspecified damages. NMGML has counterclaimed against this amount and raised
a provision of US$4.2 million reflecting the view of NMGML as to the proper interpretation and application of the rate review
clauses of the Contracts.
A claim has been made for US$15 million by the contractor responsible for the engineering, procurement and construction of a
carbon in leach circuit at Bulyanhulu Gold Mine (“BGML”). BGML has made claims in relation to delay damages and other
breaches of the contract totalling US$22 million. These claims were referred to adjudication, with the initial decision finding in
favour of the contractor. The claims have now been referred to arbitration and management is of the opinion that it will be
successful in respect of both claims.
b)
Tax-related contingencies
The TRA has issued a number of tax assessments to the Group relating to past taxation years from 2002 onwards. The Group
believes that these assessments are incorrect and has filed objections to each of them. The Group is attempting to resolve these
matters by means of discussions with the TRA or through the Tanzanian Appeals process. During 2013, the Board ruled in favour
of BGML in relation to 7 of 10 issues raised by the TRA in final assessments for 2000 – 2006 years under review. The TRA filed a
notice of intention to appeal against the ruling of the Board and Acacia filed a counter appeal in respect of BGML to the Appeals
Tribunal for all 3 items that were lost. The Tribunal delivered its judgement in 2014 and confirmed the Board’s decision on the
three items that Acacia lost. Following the Tribunals decision, two notices of intention to appeal were filed.The positions that were
ruled against BGML were sufficiently provided for in prior year results and management is of the opinion that open issues will not
result in any material liabilities to the Group.
c)
Exploration and development agreements – Mining Licences
Pursuant to agreements with the Government of the United Republic of Tanzania, the Group was issued special mining licences
for Bulyanhulu, Buzwagi, and North Mara mines and mining licences for building materials at Bulyanhulu and Buzwagi Mines. The
agreement requires the Group to pay to the government of Tanzania annual rents of US$5,000 per annum per square kilometre for
as long as the Group holds the special mining licences and US$2,000 per annum per square kilometre for so long as the Group
LSE:ACA
46
holds the mining licences for building materials. The total commitment for 2015 for the remaining special mining licences and
mining licences for building materials amount to US$0.66 million (2014: US$0.65 million)..
d)
Purchase commitments
At 31 December 2014, the Group had purchase obligations for supplies and consumables of approximately US$64 million (2013:
US$48 million).
e)
Capital commitments
In addition to entering into various operational commitments in the normal course of business, the Group entered into contracts for
capital expenditure of approximately US$20 million in 2014 (2013: US$6 million).
19. Post Balance Sheet Events
A final dividend of US2.8 cents per share has been proposed, which will result in a total dividend of US4.2 cents per share for
2014. The final dividend is to be proposed at the Annual General Meeting on 23 April 2015 and paid on 29 May 2015 to
shareholders on the register on 8 May 2015. The ex-dividend date is 7 May 2015. These financial statements do not reflect this
dividend payable.
LSE:ACA
47
Reserves and Resources
Mineral reserves and mineral resources estimates contained in this report have been calculated as at 31 December 2014 in
accordance with National Instrument 43-101 as required by Canadian securities regulatory authorities, unless otherwise stated.
Canadian Institute of Mining, Metallurgy and Petroleum (CIM) definitions were followed for mineral reserves and resources.
Calculations have been reviewed, verified (including estimation methodology, sampling, analytical and test data) and compiled by
Acacia personnel under the supervision of Acacia Qualified Persons: Nic Schoeman, General Manager Technical Services, Haydn
Hadlow, Chief Mineral Resources Manager, and Samuel Eshun, Technical Services Manager. However, the figures stated are
estimates and no assurances can be given that the indicated quantities of metal will be produced. In addition, totals stated may not
add up due to rounding.
Mineral reserves have been calculated using an assumed long-term average gold price of US$1,300.00 per ounce, a silver price of
US$20.00 per ounce and a copper price of US$3.00 per pound. Reserve calculations incorporate current and/or expected mine
plans and cost levels at each property and reflect contained ounces.
Mineral resources at Acacia mines have been calculated using an assumed long-term average gold price of US$1,500.00 per
ounce, a silver price of US$20.00 per ounce and a copper price of US$3.00 per pound and reflect contained ounces.
Resources have been estimated using varying cut-off grades, depending on the type of mine or project, its maturity and ore types
at each property. Reserve estimates are dynamic and are influenced by changing economic conditions, technical issues,
environmental regulations and any other relevant new information and therefore these can vary from year to year. Resource
estimates can also change and tend to be influenced mostly by new information pertaining to the understanding of the deposit and
secondly the conversion to ore reserves. In addition, estimates of inferred mineral resources may not form the basis of an
economic analysis and it cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher
category. Therefore, investors are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be
economically or legally mined, or that it will ever be upgraded to a higher category. Likewise, investors are cautioned not to
assume that all or any part of measured or indicated mineral resources will ever be upgraded to mineral reserves.
LSE:ACA
48
Mine Gold Reserves & Resources
2014 YE
2013 YE
Bulyanhulu-Underground
Proven and probable
Mineral Resource
Inferred
Tonnes
(000's)
29,681
12,399
13,725
Grade Au
(g/t)
9.667
8.491
9.897
Ounce
(000's)
9,225
3,385
4,367
Tonnes
(000's)
29,610
10,225
6,632
Grade Au
(g/t)
9.530
10.653
12.877
Ounce
(000's)
9,072
3,502
2,745
Bulyanhulu- Tailings
Proven and probable
Mineral Resource
Inferred
9,082
-
1.046
-
305
-
7,974
-
1.229
-
315
-
Buzwagi
Proven and probable
Mineral Resource
Inferred
20,762
48,333
4,623
1.345
1.298
1.237
898
2,017
184
24,105
49,109
7,173
1.445
1.291
1.183
1,120
2,038
273
North Mara
Proven and probable
Mineral Resource
Inferred
23,653
17,960
10,073
2.692
2.873
3.236
2,047
1,659
1,048
21,710
25,266
735
3.169
3.316
2.730
2,212
2,694
65
Total
Proven and probable
Mineral Resource
Inferred
83,178
78,692
28,422
4.665
2.791
6.128
12,475
7,061
5,599
83,399
84,600
14,540
4.743
3.027
6.595
12,719
8,233
3,083
Grade Au
(g/t)
1.320
0.952
Ounce
(000's)
4,034
68
Tonnes
(000's)
95,054
2,214
Grade Au
(g/t)
1.320
0.952
Exploration Property Gold Reserves & Resources
2014 YE
2013 YE
Tusker (Nyanzaga)
Proven and probable
Mineral Resource
Inferred
Tonnes
(000's)
95,054
2,214
Kilimani (Nyanzaga)
Proven and probable
Mineral Resource
Inferred
2,298
828
0.929
0.858
-
2,298
828
0.929
0.858
-
69
23
Golden Ridge
Proven and probable
Mineral Resource
Inferred
7,944
1,414
2.779
2.268
710
103
7,944
1,414
2.779
2.268
710
103
Total Exploration
Proven and probable
Mineral Resource
105,296
1.422
4,812
105,296
1.422
4,812
4,456
1.352
194
4,456
1.352
194
83,178
183,988
32,877
4.665
2.007
5.481
12,475
11,873
5,793
83,399
189,895
18,995
4.743
2.137
5.365
12,719
13,046
3,276
Inferred
Total Acacia
Proven and probable
Mineral Resource
Inferred
LSE:ACA
Ounce
(000's)
4,034
68
69
23
49
Contained Copper Reported w ithin Gold Reserves & Resources
2014 YE
Tonnes
(000's)
29,681
12,399
13,725
Grade Cu
(%)
0.586
0.510
0.609
2013 YE
Pounds
(000's)
383,707
139,306
184,269
Tonnes
(000's)
29,610
10,225
6,632
Grade Cu
(%)
0.566
0.671
0.774
Pounds
(000's)
369,616
151,237
113,174
7,974
-
0.036
-
6,329
-
Proven and probable
Mineral Resource
Inferred
Proven and probable
Mineral Resource
Inferred
-
-
Buzw agi
Proven and probable
Mineral Resource
Inferred
20,762
48,333
4,623
0.095
0.110
0.109
43,647
116,817
11,066
24,105
49,109
7,173
0.100
0.109
0.084
53,263
118,283
13,323
Total
Proven and probable
Mineral Resource
Inferred
50,443
60,732
18,348
0.384
0.191
0.483
427,354
256,123
195,335
61,689
59,333
13,805
0.316
0.206
0.416
429,207
269,520
126,497
-
Contained Silver Reported w ithin Gold Reserves & Resources
2014 YE
Proven and probable
Mineral Resource
Inferred
Tonnes
(000's)
29,681
12,399
13,725
Proven and probable
Mineral Resource
Inferred
9,082
-
Total
Proven and probable
Mineral Resource
Inferred
38,763
12,399
13,725
LSE:ACA
2013 YE
Grade Ag
(g/t)
8.321
6.506
7.097
Ounce
(000's)
7,941
2,594
3,132
Tonnes
(000's)
29,610
10,225
6,632
Grade Ag
(g/t)
8.066
8.437
10.159
Ounce
(000's)
7,679
2,773
2,166
3.275
-
956
-
7,974
-
3.848
-
987
-
8,897
2,594
3,132
37,584
10,225
6,632
7.171
8.437
10.159
7.139
6.506
7.097
8,665
2,773
2,166
50
Mine Gold Reserves
Mine
Bulyanhulu -Underground
Classification
Proven
Probable
Total (P+P)
Tonnes
1,473,149
28,208,118
29,681,267
Bulyanhulu - Tailings
Proven
Probable
Total (P+P)
9,081,538
9,081,538
1.046
1.046
305,395
305,395
Buzw agi
Proven
Probable
Total (P+P)
6,640,954
14,120,973
20,761,927
1.011
1.501
1.345
215,936
681,643
897,579
North Mara
Proven
Probable
Total (P+P)
3,859,459
19,793,514
23,652,973
2.117
2.804
2.692
262,671
1,784,185
2,046,855
Total Mine Gold Reserves
Proven
Probable
Total (P+P)
11,973,563
71,204,142
83,177,705
2.687
4.997
4.665
1,034,522
11,440,539
12,475,061
Contained Copper Reported w ithin Gold Reserves
Classification
Proven
Probable
Total
Tonnes
1,473,149
28,208,118
29,681,267
-
Grade Au (g/t) Contained Au (oz)
11.737
555,916
9.559
8,669,316
9.667
9,225,232
Grade Cu (%)
Contained Cu(lbs)
0.661
21,478,803
0.582
362,227,859
0.586
383,706,662
Proven
Probable
Total
Buzw agi
Proven
Probable
Total
6,640,954
14,120,973
20,761,927
0.067
0.109
0.095
9,862,505
33,784,850
43,647,355
Total Copper Reported w ithin Gold Reserves
Proven
Probable
Total
8,114,103
42,329,090
50,443,194
0.175
0.424
0.384
31,341,308
396,012,709
427,354,018
Contained Silver Reported w ithin Gold Reserves
Classification
Proven
Probable
Total
Tonnes
1,473,149
28,208,118
29,681,267
-
-
Grade Ag (g/t) Contained Ag (oz)
8.830
418,223
8.294
7,522,301
8.321
7,940,524
Proven
Probable
Total
9,081,538
9,081,538
3.275
3.275
956,190
956,190
Proven
Probable
Total
1,473,149
37,289,656
38,762,805
8.830
7.072
7.139
418,223
8,478,491
8,896,714
Total Silver Reported w ithin Gold Reserves
LSE:ACA
51
Mine Resource (Measured & Indicated, exclusive of Reserves)
Classification
Measured
Indicated
Total (M+I)
Tonnes
12,399,103
12,399,103
Grade Au (g/t)
8.491
8.491
Measured
Indicated
Total (M+I)
Buzw agi
Measured
Indicated
Total (M+I)
209,019
48,123,770
48,332,789
1.583
1.297
1.298
10,641
2,006,270
2,016,911
North Mara
Measured
Indicated
Total (M+I)
2,849,472
15,110,890
17,960,361
2.704
2.305
2.873
247,737
1,411,197
1,658,934
Measured
Indicated
Total (M+I)
3,058,490
75,633,763
78,692,253
2.628
2.797
2.791
258,378
6,802,518
7,060,896
Total Mine Resource (M+I)
-
Contained Au (oz)
3,385,051
3,385,051
-
-
Contained Copper w ithin gold resources
Classification
Measured
Indicated
Total (M+I)
Tonnes
Grade (%)
12,399,103
12,399,103
139,306,110
139,306,110
Measured
Indicated
Total (M+I)
Buzw agi
Measured
Indicated
Total (M+I)
209,019
48,123,770
48,332,789
0.116
0.110
0.110
533,772
116,283,141
116,816,913
Measured
Indicated
Total (M+I)
209,019
60,522,873
60,731,892
0.116
0.192
0.191
533,772
255,589,251
256,123,023
Grade Ag (g/t)
6.506
6.506
Contained Au (oz)
2,593,528
2,593,528
Total Copper w ithin gold resource
-
Pounds
0.510
0.510
-
-
Contained Silver w ithin gold resources
Bulyanhulu - Underground
Total Silver w ithin gold resource
Classification
Measured
Indicated
Total (M+I)
Measured
Indicated
Total (M+I)
Tonnes
12,399,103
12,399,103
-
Measured
Indicated
Total (M+I)
12,399,103
12,399,103
LSE:ACA
6.506
6.506
2,593,528
2,593,528
52

FY2014 Preliminary Results

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